The FTSE 100 has delivered some remarkable gains in 2025, with the UK’s flagship index climbing by over 16% since January. And when including dividends paid along the way, the total return sits over 20%. Yet sadly, not every large-cap stock in London is having a great year.
For example, just recently, 3i Group (LSE:III) took a nose dive, falling by 30% during the fortnight following its November results. But could this have been an overreaction?
That certainly seems to be the belief among insiders since collectively they’ve bought just shy of £5m worth of shares since the fall. And CEO Simon Borrows alone invested over £1m into 3i shares!
Do these insiders know something? And should investors think about following in their footsteps?
Massive insider buying activity
Over the space of roughly two weeks, £4,722,444 worth of 3i Group shares were bought by the top brass.
- CEO Simon Borrows invested £1,010,010 into 3i Group, buying 30,000 shares.
- Senior Partner Peter Wirtz invested £853,883 to buy 25,000 shares.
- Non-executive director Peter McKellar also bought 25,000 shares for £861,503.
- Group Finance Director James Hatchley has bought 15,000 shares for £509,550.
- 3i’s General Counsel also joined in buying 16,454 shares for £495,265.
- And another 29,988 shares were also purchased by other company insiders for £992,233.
Seeing such widespread buying activity among key insiders over such a short time span likely means these purchases were coordinated. However, the signal is clear. Insiders are buying the dip together to take advantage of what they think is an overreaction by the market.
Are they right? Let’s take a closer look at the results.
What caused the sell-off?
Despite what the double-digit sell-off implies, 3i Group’s latest results were actually pretty strong.
Overall, the investment company delivered a 13% return on shareholder funds across the six-month period ending in September. As such, total comprehensive income for the period jumped from £2,046m to £3,291m year on year. Liquidity improved, net debt fell, and dividends received a near-20% hike, rising to 36.5p per share.
Even the net asset value (NAV) per share surged by 26% to 2,857p. So what happened?
The answer lies in weak guidance combined with a premium valuation. Prior to these results, the FTSE 100 stock was trading at an exceptionally rich valuation with a near-48% premium to NAV.
That’s a clear reflection of the quality of the company. But it also opens the door to significant volatility if momentum starts to slow.
So it’s not surprising that investors began selling after management tone became more cautious, especially in regards to its investment in Action, a discount retailer based in the Netherlands and responsible for two-thirds of 3i Group’s investment portfolio value.
The bottom line
Even after this sell-off, 3i Group shares are still trading at a premium to NAV, albeit a much smaller one. Therefore, if more cautious guidance emerges, another round of volatility could follow.
But the high level of insider confidence is encouraging. And with a long track record of defying expectations, I think this FTSE 100 stock is worth mulling over.
