I always sit up and pay attention when I see an insider has been buying or selling a UK stock – especially if it’s on my buy list or in my portfolio.
The legendary investor Peter Lynch once said, “insiders might sell their shares for any number of reasons…”
For example, tax collectors could come knocking, a lender could unexpectedly call a loan, or a property they own could suddenly need repair costs.
“…But they buy them for only one: they think the price will rise”.
Order up, sell out
On 26 April, Deliveroo (LSE:ROO) CEO Will Shu sold 1,995,924 of company shares, worth £2.1m.
As Lynch pointed out, we don’t know what personal reasons may have led the CEO to make that call.
We do know, however, that the sell decision came amid job cuts, a fall in order numbers, and a decision that Deliveroo would exit an important market.
In February, Shu announced that 350 roles at the food-delivery company would be slashed, equal to around 9% of its headcount.
Across the group, orders fell in the final quarter of 2021/22.
To add insult to injury, last year the company had to shut up shop in Australia, the home of its marsupial mascot.
Still, Deliveroo reported a 14% increase in revenue in 2022 compared with 2021.
And unlike many beaten-down pandemic growth stocks, the company has no debt. In fact, its net cash balance is rather large at £1bn, or 50% of its market capitalisation.
A bull’s resolve
There has been a stream of gloomy news for the London Stock Exchange Group (LSE:LSEG) this year.
Construction giant CRS said last month it would de-list from the LSE in favour of the New York Stock Exchange. After CRS, fellow construction company Kingspan said it too was jumping on the de-listing bandwagon.
According to the Financial Times, even top executives at Shell have been weighing up abandoning the LSE.
Still, that hasn’t stopped one insider at the capital markets infrastructure provider from upping his stake in the company.
Martin Brand, a non-executive director at the LSE, was busy buying (and selling) stock in the company last month.
Strangely, Brand reported eight transactions in LSE stock during April, buying five times and selling three times.
| Shares bought | Value of purchases | Shares sold | Value of sales | |
| 03/04/2023 | 14,301 | £1,113,904.89 | ||
| 05/04/2023 | 8,661 | £685,604.76 | ||
| 11/04/2023 | 13,357 | £1,042,246.71 | ||
| 13/04/2023 | 8,612 | £690,251.80 | ||
| 17/04/2023 | 14,313 | £1,128,580.05 | ||
| 19/04/2023 | 9,880 | £782,002 | ||
| 21/04/2023 | 7,325 | £587,465 | ||
| 26/04/2023 | 13585 | £1,087,071.70 |
The net effect of Brand’s activity in April was to buy 28,910 shares with a net value of nearly £2.3m.
| Net shares bought | Net value | |
| April | 28,910 | £2,293,699.49 |
Brand could have been trading the shares based on news flow, or his activity could have been for personal reasons.
Still, he appears to be kicking off May with a bigger exposure to LSE than he had in April.
To buy or not to buy?
The Deliveroo CEO’s decision to divest over £2m of shares in the company is a red flag from my perspective.
As for LSE, although an insider upped his stake considerably, the activity reflects something closer to trading than investing, with eight transactions in one month.
I think I can find better opportunities for my portfolio, so I will be sitting on the sidelines for now.
