Has the threat of an imminent increase in UK capital gains tax impacted UK directors transactions in their own companies and which companies are seeing the most concerning director sales?
We have seen a clear increase in the number of UK director sales (relative to director buys) since the UK election in July 2024, likely at least partly caused by directors accelerating plans to sell stock to avoid any potential increase in UK capital gains tax.
A key metric we use to assess the market outlook is the number of directors buying relative to the number selling – the “Buy/Sell ratio”. This metric is a strong barometer of executive confidence and has been very successful at identifying turning points in the market. In March 2020 the ratio reached an unprecedented positive level of over 14x, driven by a surge of buying, as directors identified clear value in their companies on COVID driven market weakness.
In contrast the current monthly ratio of Buyers/Sellers to date (to the 10th October) is, at 1.64x, the second lowest level we have seen since 2018.
With the level of sellers relative to buyers at a concerning level, which companies have seen the most worrying sales?
- Greggs. Richard Hutton (CFO since 1997) sold £1.9 million of stock at £28.51 on the 8th October, approximately halving his holding. This is a concerning large sale, much his largest sale to date and a reversal from a series of buys, most recently at £27.69 in March 2024.
- Next. Simon Wolfson (CEO since 2001) sold £29 million of stock on the 24th September at £100.78. The sale is 3x larger than any of his previous sales and reduces his holding by 20%.
- Balfour Beatty. Philip Harrison (CFO since 2015) sold £2.5 million of stock across two trades in August and October 2024, reducing his shareholding by more than 50%. He had never previously sold more than £500,000 of stock in a transaction.
Simon Bailey, Senior Researcher at Smart Insider said:
“The potential change in UK capital gains tax has contributed to an increase in UK director selling. Whilst some of the sales are likely predominantly driven by the fear of tax changes, there will also be directors who have underlying concerns about their company’s prospects that decide to accelerate their plans to sell and act now. We have identified several companies with concerning large director trades.”
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