Interactive Investor

Insider: big buying and selling at three FTSE 100 companies

16th January 2023 09:02

Graeme Evans from interactive investor

There’s a big show of confidence in this business as both its chairman and the City expect a rally to continue, but two other blue-chip directors have decided to cash in after a recent recovery.

A £240,000 purchase by retail veteran Andy Higginson has backed JD Sports Fashion (LSE:JD.) to continue the run of form that’s seen shares rise by a third since Christmas.

The investment by Higginson, who is chairman of the FTSE 100-listed company that is headquartered in the town where he grew up, was made after a festive sales update showed JD on track for annual profits at the top end of hopes.

Shares were 119.5p before Christmas and 89p in October but closed last week at 158.9p. However, broker Peel Hunt believes that JD’s re-rating has only just got begun after highlighting a price target of 250p following the second half sales beat.

Higginson bought his JD shares at a price just above 150p, the second time he has entered the market since being appointed as the company’s chair in July.

His opening purchase in August cost him £388,000 and was made at 132.6p, but following the recent momentum, the value of this holding has grown by some £75,000.

Higginson stepped into the role after a period of boardroom turmoil that included an overhaul of corporate governance and departure of long-serving executive chairman Peter Cowgill.

The new chair knows both the retail sector and the company well, having grown up in the Lancashire town of Bury where JD was founded in 1981 and is still headquartered.

The former Bury Grammar School pupil went on to hold senior roles over nearly 15 years at Tesco (LSE:TSCO) before serving as chair of supermarket Morrisons from January 2015 until its private equity takeover in November 2021.

When Higginson took on the JD role, he hailed the company as an exceptional business and one boasting a strong strategic position. This encompasses more than 3,400 stores in 32 countries and revenues of £8.6 billion, about a third of which come from North America through brands such as Finish Line and Shoe Palace.

Shares soared to over 225p during 2021, only to fall sharply last year as investors rotated away from growth stocks and the outlook on consumer spending deteriorated.

However, last week’s run of robust updates from retailers including JD Sports boosted hopes that trading conditions may not end up being quite as bad as the market feared in the autumn.

JD reported sales growth of more than 10% year-on-year for the final 22 weeks of 2022, an acceleration from 5% in the first half and steering the City towards profit for the year to January at the upper end of hopes at nearly £985 million.

One of the most eye-catching performances came from North America, where the company has rebounded strongly to deliver growth of more than 20% in the second half.Régis Schultz, whose appointment as chief executive was announced by Higginson in August, has promised that JD will step up investment in stores and technology during 2023 in order to target “significant opportunities” in sports fashion.

The chain will look to repeat the success of “attention-grabbing theatre in stores”, as well as its digital technologies and availability of key styles. It added last week that group profits for the year beginning February should be just over £1 billion.

Analysts at UBS, who have a price target of 210p, described this estimate as reassuring given that the company has a reputation for being conservative in its guidance.

Peel Hunt added: “The dual curveball of management change and a consumer lacking in confidence have both been dealt with emphatically and the forecast momentum has not dwindled.

“The shares have perked up a bit, but that is just the start of the re-rating - a sub-teens price/earnings multiple is great value in our view.”

Time to sell

A near record high for the FTSE 100 index provided the backdrop for selling by directors at top flight companies Whitbread (LSE:WTB) and United Utilities Group (LSE:UU.) last week.

Steve Mogford, who is about to step down after running the North West-based water company since 2011, raised just over £1 million on Thursday by selling 100,000 shares at 1,045p. The stock stood at 828p after the UK’s mini-budget turmoil, having been at 1,134p in August.

Mogford, who is being replaced by the company’s customer service and people director Louise Beardmore, had a holding of almost 400,000 shares at the end of the last financial year.

    At Premier Inn business Whitbread, group operations director Nigel Jones raised £76,000 by selling shares on Friday at 3,064p. The stock finished the week at its highest level since February and up 5% since a trading update on Thursday highlighted strong momentum in the UK with total accommodation sales up 25% in the third quarter.

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