Company directors buying or selling stock in their own firm is very interesting for investors. Granted, there are various reasons why a director might own or not own a stock. But regardless of the underlying reason, having a shareholding means that they have a vested interest in making the business a long-term success. They have skin in the game! Here are some FTSE 100 stocks that have recently been bought or sold by the top team.
Selling from a long-time employee
The first FTSE 100 company in the spotlight for director actions is Next. Merchandise and operations director Richard Papp sold 5,300 shares last week. This came to a value of £344,817.46.
Next shares have been performing well recently, up 8% in a year but rallying 37% in the past six months. For an insider, this could be seen as a good opportunity to sell some stock. After all, Papp has been with the business since 1991. Therefore, I imagine he’s accumulated a chunky about of stock in the process.
However, investors might view this cautiously, especially following the annual report last month warning of a difficult 2023. To reduce noise about this size of stock selling, Papp could have sold smaller amounts over a period of time.
Multiple buy orders after strong results
A case of multiple company directors buying shares was noted last week with Pearson. The publishing and education company did well last year, with sales growing by 5% and adjusted operating profit increasing by 11% from 2021.
Chair Omid Kordestani and Deputy Chair Tim Score both bought stock. Between the two of them, the total value came to just under £84,000.
In my opinion, these purchases could be related to the solid 2022 financial results. Both have a good understanding of where the business is headed. Via the share purchases, I think it would indicate that they believe the future is bright.
Mixed signals from an insider
A good example of how investors need to be careful in interpreting buying and selling can be noted via Martin Brand at the London Stock Exchange Group.
At the end of last month, he purchased 9,971 shares adding up to a value of £778,435.97. He’s a non-executive director, which means he’s independent to the business and has a separate day job.
This large purchase might have led investors to get excited about big things to come for the stock. Yet later that same week, he sold a total of 20,117 shares! Finally, last week he bought 14,301 shares. In total, the monetary value of the buying and selling means his net purchase amount was much smaller.
I don’t know the reason behind this, whether it was related to taxation or something else. But this final case reminds me that not all director dealings indicate potential future success or trouble for the stock. Some are simply for other unrelated reasons.
