Insider Special: best and worst director deals of 2022
23rd December 2022 08:59
by Graeme Evans from interactive investor
Company executives are often best placed to know the right time to buy shares in the businesses they run. These bosses hit the jackpot in 2022. We also name the ones who didn’t.
Directors at Fevertree Drinks (LSE:FEVR), Rio Tinto (LSE:RIO) and Unilever (LSE:ULVR) are sitting on significant paper profits after making well-timed purchases in support of their respective shares during 2022.
Among those counting hefty losses, however, are Future (LSE:FUTR) chief executive Zillah Byng-Thorne, two directors at Molten Ventures (LSE:GROW) and various senior figures across housebuilding.
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Meanwhile, the now former bosses of JD Sports Fashion (LSE:JD.) and B&M European Value Retail (LSE:BME) are likely to be grateful they sold shares ahead of this year’s sharp fall in retail sector valuations.
The boardroom winners and losers are based on a look back to our reporting of insider share purchases at more than 100 FTSE All-Share and AIM-listed companies during 2022.
It’s worth remembering that directors are invested for the longer term and these results will exclude any dividend proceeds. But the findings are a useful reminder for retail investors of a potential buy signal if bosses are putting their own money on the line.
These purchases can show that a board thinks the stock market has gone too far in their reaction to bad news or has mispriced the potential of a turnaround strategy.
That’s often the case in the lower reaches of the market, where the faith of directors has just been rewarded at Card Factory (LSE:CARD),IG Design Group (LSE:IGR), Jet2 (LSE:JET2), Shoe Zone (LSE:SHOE) and Funding Circle (LSE:FCH) among others.
Fevertree chief executive Tim Warrillow spent £1 million on shares in July at a price of 870p, having just seen the value of the posh tonics maker plummet to its lowest level since 2016 and below the 889p seen at the height of pandemic sell-off in March 2020.
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A significant deterioration in margins caused by higher glass costs and labour shortages hit the shares, but they’ve since recovered to reach Christmas week at around 1,052p and leave co-founder Warrillow sitting on a £200,000 paper profit.
The same month, five directors of IG Design declared investments worth £175,000 in support of the turnaround strategy of the stationery and Christmas crackers firm.
They did so at prices between 70p and 84p, having seen shares slide since last year due to higher supply chain costs and Covid-related freight availability issues. A much less troubled run up to this Christmas period means the AIM-listed stock now stands near 117.5p.
Card Factory chairman Paul Moody has also been rewarded for his backing of the retailer when shares were being pummelled in the wake of a profit warning last December.
His new year purchase worth £112,000 has grown in value by around £44,000 after shares lifted from 56p to 78.3p, fuelled by a near doubling in price since mid-October.
Among London’s larger companies, well-timed deals have included one by Rio Tinto boss Jakob Stausholm after he spent £485,600 on shares at a price of 4,856p.
His move, which followed July’s bigger-than-expected cut in Rio’s top-ranking dividend, has paid off after an improvement in shares to 5,638p that’s so far generated a profit of £78,200.
Unilever non-executive director Adrian Hennah picked the right moment to buy shares in February, having seen the company’s valuation hammered in the aftermath of the Dove and Marmite maker’s failed £50 billion bid for GSK’s consumer healthcare arm.
The £150,000 investment by the former Reckitt Benckiser finance boss was at 3,762.5p, but shares have since rallied to 4,166.5p for 10% growth worth more than £16,000 to Hennah.
Big deals still in the red
Zillah Byng-Thorne has been a regular buyer of Future shares, but this year’s purchases haven’t played out well for the chief executive following a big fall in the magazine publisher’s value.
February’s £233,000 acquisition is now worth nearer to £92,000 after a flight from growth and tech stocks caused Future shares to fall from 3,142p to a pre-Christmas level of 1,242p.
When including other purchases made in May and September, Byng-Thorne’s three Future investments of 2022 have halved in value to around £175,000.
The tech sector turbulence also left investments made in January by the top two executives at Cazoo and Trustpilot backer Molten Ventures significantly under water.
Purchases worth a combined £60,000 were made by chief executive Martin Davis and chief financial officer Ben Wilkinson at prices between 840p and 873p, but the FTSE 250-listed stock is now nearer to 350p for a reduced value of around £25,000.
It’s also been a challenging year for directors in the housebuilding sector, many of whom bought shares in their companies at levels well below where they started 2022.
In April, we reported that a person connected to new Bellway (LSE:BWY) chairman John Tutte had bought shares worth £500,000 at a price of 2,548p. That’s now worth closer to £372,000 after a further fall in the FTSE 250-listed stock to around 1,861p.
The same week Redrow (LSE:RDW) director Richard Akers picked up shares worth £51,000 at a price of 513p, but the value of this investment has dropped by £5,800 after a fall in price to 452p.
Right time to sell
On the sell side, JD Sports Fashion executive chairman Peter Cowgill generated more than £21 million in January by halving his stake in the sportswear chain at a price of 213.2p. A tumultuous year for the former high-flying stock ended with the share price near 115.5p and Cowgill no longer with the business following a review of corporate governance.
It also emerged in early January that the family office of B&M chief executive Simon Arora had sold 40 million shares at 585p, raising £234 million.
Tough trading conditions mean B&M shares have since fallen back towards 400p, with Arora ending his long spell as chief executive in September and due to leave the board by next April.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
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