Insider: FTSE 100 chiefs spend £2m on shares after 20% crash

A £1 million shares purchase by 3i Group Ord (LSE:III) chief executive Simon Borrows has delivered a robust response to stock market jitters over top performing investment Action.

Borrows, who has run Britain’s oldest buyout firm since 2012, increased his stake on the day that £7 billion was wiped from the value of the FTSE 100-listed company.

• Our Services: SIPP Account | Stocks & Shares ISA | See all Investment Accounts

The selling came as 3i delivered half-year results slightly ahead of expectations but warned that discount chain Action may miss its full-year sales target due to weaker conditions in France.

The dealings by Borrows took place at a year-low price of 3,367p, while senior partner and head of private equity Peter Wirtz spent £854,000 at 3,415p. On Friday, a person connected to non-executive director Peter McKellar bought £134,000 of stock.

Despite the £2 million show of support in the 3i boardroom, the shares traded as low as 3,342p Friday, their worst price in a year. They peaked at a record 4,497p towards the end of October, having surged by a third in the past 12 months on the back of continued strong trading at Action.

The success of the retailer since 3i’s initial 130 million euros investment in 2011 means the Amsterdam-based business now represents more than 70% of the total portfolio by value. It recently raised its ownership of the pan-European retailer to 62.3%.

• Shares for the future: time to downgrade this AIM stock
• The Week Ahead: Imperial Brands, Jet2, JD Sports, Babcock

The other long-term compounder in the portfolio is personal care products firm Royal Sanders, with a valuation of £968 million in last week’s results.

Both assets delivered “excellent” returns during the six months to 30 September as they contributed to a better-than-expected 12% rise in 3i’s net asset value per share to 2,857p.

The group said the engine of Action’s growth continued to be its store opening programme, which remains on track for another record year based on hopes for 380 new outlets. Since 3i’s involvement, Action has grown from 250 stores to more than 3,000 across 13 countries.

Like-for-like sales are up by 5.7% in the year-to-date, but this is below March’s 6.1% guidance after October’s performance was impacted by softer consumer conditions.

France, which accounts for around one-third of sales, has been the weak spot in Action’s portfolio although its like-for-like sales remain positive across the year.

The group said: “The biggest trading weeks of the year are coming up for Action. The business is well stocked with an excellent range of products at exceptional prices which should resonate well with customers.”

• Don’t risk your portfolio by hyperfocusing on tax
• Stockwatch: a view on Burberry and the luxury goods sector

Across the business, 3i said it would remain cautious on the deployment of new capital as it looks to target lower-risk reinvestments in “businesses we know and trust”.

Borrows added: “We are mindful that both the transaction market and the wider environment are likely to remain challenging into the second half of our financial year.”

Deutsche Bank lowered its price target to 4,300p from 4,600p in the wake of the results, while UBS is at 4,700p.

The success of Action made 3i the best performing investment trust in the five years since Covid after an initial £1,000 more than quadrupled to £4,134 by the middle of February this year.

This record attracted interactive investor customers in the wake of this week’s sell-off, with the company among the most popular investments on the platform on Thursday and Friday.

Backing a recovery

The top two directors of WPP (LSE:WPP) have staked £290,000 in the belief that they will lead a turnaround for the marketing and advertising group’s heavily sold shares.

Former BT boss Philip Jansen, who became WPP chair in January, and recently-appointed chief executive Cindy Rose both bought 50,000 shares on Thursday at prices between 285p and 289p.

The stock closed last week at 288.3p, a fall of two-thirds so far this year and leaving WPP with a £3 billion market valuation that threatens its 28-year stay in the FTSE 100 index.

A third-quarter update at the end of October fuelled the latest sell-off after the group forecast a full-year like-for-like revenues decline of 5.5-6%, compared with the 3-5% seen previously.

Rose, who spent six years as a non-executive director before taking the chief executive’s role, called the performance unacceptable. Ahead of presenting a strategic review early next year, she pledged to make WPP’s offering simpler and more integrated, powered by data and AI.

• How the Autumn Budget could impact your retirement
• Sign up to our free newsletter for investment ideas, latest news and award-winning analysis

The former Microsoft executive said the group had the foundations and ingredients needed to succeed, including “amazing long-standing clients” that represent the largest, most well-known brands in the world.

She said: "There is a lot to do, and it will take time to see the impact, but in my first 60 days we are already moving at pace with some initiatives already announced and more to come.”

Deutsche Bank cut its price target to 510p following the update but maintained its Buy rating, although it accepts there are limited near-term positive catalysts.