Directors are buying and selling these FTSE 100 stocks heading into 2023

Keeping an eye on which directors are buying and selling their own FTSE 100 stocks is an important part of my research process.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

2023 concept with a lightbulb replacing the zero

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The people running a company and sitting on its boards have an informational advantage over the rest of us. If they are buying or selling shares then I might assume that’s good news if the former, and bad if the latter. The following FTSE 100 stocks have seen appreciable levels of director dealings in the run-up to 2023.

Lloyds shares being bought by directors

A non-executive director of Lloyds Banking Group (LSE: LLOY) bought £198,994 worth of shares in the company on 1 December 2022. Considering that after the transaction the director held £531,662, this was a significant investment. It could be seen as a vote of confidence in this FTSE 100 stock from someone that sits on its board.

Perhaps that has something to do with rising interest rates and how Lloyds is benefitting from them. The bank can pass the higher rates to customers taking loans from the bank. But, it is not passing quite as much on to savers in the form of higher interest rates on their accounts. Thus, analysts believe that for every 0.25% the Bank of England raises the interest rate, Lloyds will earn £200m in income.

At some point though, higher rates might not mean higher income. As borrowing becomes more costly, new loan applications might slow down. As interest payments rise, defaults and write-offs might surge as customers struggle to pay back what they owe. And savers might get fed up and seek other places to put their cash that pay closer to the market rate for interest.

Directors are selling these FTSE 100 stocks

A director of Investec, an asset management firm, sold £7.3m worth of shares in the company last month. In late November 2022, two other directors offloaded £464k worth of shares. An Endeavour Mining board member sold £4.1m of shares in the company on 16 November 2022. Some £2.1m worth of shares in AstraZeneca were offloaded by its chief financial officer on 23 November 2022.

Finally, directors of Sage Group sold £174k of shares in the company on 18 November 2022. A further £358k worth was sold on 6 December 2002 and £197k on 8 December 2022.

What do I do with this information?

A director buying might seem like a fairly unambiguous signal that they think things are going to go well for the company. But, they might be contractually obliged to hold a certain amount of their company’s stock. Perhaps they want to buy to cast the company in a favourable light.

A director selling might be doing so because they think the share price is heading lower. But, they could also have been awarded a significant amount of shares as part of their compensation. As a result, their investment portfolio is highly concentrated in the stock of the company they work for. In that case, selling to diversify is entirely reasonable.

I would not make a decision based on director dealings alone. However, they do form a part of my investment research. So much of investing is about judgement and context. A director selling a chunk of shares at or near an all-time high price without being awarded a significant amount of them in compensation would greatly trouble me and necessitate further research. Smaller, regularly spaced buys would probably not get me too excited.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

James McCombie has no position in any of the shares mentioned. The Motley Fool UK has recommended Lloyds Banking Group Plc and Sage Group Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

6.9% dividend yield! 2 cheap stocks to consider for a £1,380 passive income

Looking for a market-beating passive income? These FTSE 100 and FTSE 250 dividend stocks could provide a healthy second income…

Read more »

Mature black couple enjoying shopping together in UK high street
Investing Articles

Potentially 34% undervalued, should I be watching the boohoo share price?

The boohoo share price has seen a rocky few years, but with signs that the economy is improving, could this…

Read more »

Investing Articles

Is the Amazon share price primed for a drop?

The Amazon share price has been on a tear for the last year, but can this trend continue? Gordon Best…

Read more »

Photo of a man going through financial problems
Investing Articles

Down 15% in a week! What’s gone wrong with the National Grid share price?

The National Grid share price isn't supposed to crash but now it has. Harvey Jones is wondering whether to take…

Read more »

Group of young friends toasting each other with beers in a pub
Investing Articles

Taylor Wimpey just paid me £158.78. I’m aiming to turn that into a £100k yearly second income

Harvey Jones says small, regular dividend payments can turn a few pounds into a mighty second income, if he gives…

Read more »

A pastel colored growing graph with rising rocket.
Value Shares

These FTSE 250 shares are tipped to rise 14% to 18% in the next year!

Looking for the best FTSE 250 momentum shares to buy? Here are two that City analysts expect to soar in…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

Lloyds’ share price is up 20% in 3 months! How high can it go?

Lloyds’ share price has ripped higher recently. Here, Edward Sheldon provides his view on the level it could potentially climb…

Read more »

Investing Articles

Why the Rolls-Royce share price could continue to outperform

The Rolls-Royce share price keeps moving forward, but this Fool thinks it's still behind where it ought to be after…

Read more »