Interactive Investor

Insider: two huge sales and a buy

18th January 2021 10:10

Graeme Evans from interactive investor

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Directors have been taking profits in some recent star stocks, but one has made a six-figure purchase.

The entrepreneurs behind fast-growing Clipper Logistics (LSE:CLG) and B&M European Value Retail (LSE:BME) have raised almost £300 million after selling down their holdings in new year share placings.

Executive chairman Steve Parkin, who set up Clipper in 1992, secured £62.2 million on Friday following the sale of a 10.8% stake in the e-fulfilment and returns business.

Earlier in the week, the Arora brothers Simon and Bobby sold about 4% of the discount retailer's FTSE 100-listed shares to raise £218 million. They still own 11% of the business.

The scale of the respective disposals required them to be carried out by placing shares with City institutions, with Parkin doing so at a discounted price of 565p.

Estate planning and the opportunity for improved liquidity through the introduction of new investors were highlighted as reasons for his sale. However, it also follows a 300% jump in Clipper's valuation since March amid a surge in demand from online retail customers.

A post-Christmas update revealed that November and December revenues for the logistics business were 50% higher, on top of the growth of 27.9% seen in the half year to October. Customers include ASOS (LSE:ASC), Marks & Spencer (LSE:MKS), Halfords (LSE:HFD) and Morrisons (LSE:MRW).

While Clipper's contract mechanisms mean additional revenues won't necessarily feed into operating profit, the performance has given management confidence in the year ahead.

In addition, Clipper recently fulfilled its one-billionth item of PPE ordered online through a portal established with eBay in the spring of last year. 

With a 13.9% stake, Parkin is still a major shareholder in the business he created three decades ago with a team of just three people and a single driver. Now it has more than 8,000 employees, a network of 43 distribution centres and a fleet of over 470 vehicles.

He said: “I remain as confident and focused as ever in the future growth prospects of Clipper. I remain a substantial shareholder in the business and welcome the new shareholders that have come onto the register.”

B&M going cheap

Last week's sale of 40 million shares in B&M European Value Retail by SSA Investments, which is beneficially owned by Simon and Bobby Arora, was made at a price of 545p.

Having been 266p at the start of April, the stock has doubled in value thanks to essential retailer status enabling the company to continue trading through Covid-19 restrictions.

An update prior to the shares disposal showed that UK like-for-like sales rose 21.1% in the quarter to Boxing Day and that full-year earnings are expected to be between £540 million and £570 million. The figure includes the voluntary payment of business rates worth £80 million.

B&M has also given 30,000 store and distribution staff an extra week's wages, while shareholders will be rewarded on 29 January with a special dividend of 20p a share worth £200 million in total.

Simon Arora has been chief executive since 2004 after buying the business with his brother Bobby when it traded from just 21 outlets. The Liverpool-based general merchandise chain now has more than 600 shops in the UK, as well as 275 Heron Foods shops and the Babou retail operation in France.

The family's remaining stake is worth £571 million after last week's placing of shares by Merrill Lynch, although the valuation is 7% lower than at the time of the January trading update.

Boss buys new Carr’s

The new chief executive of Carr's Group (LSE:CARR) has marked his first week in charge by spending £100,000 on shares in the agricultural supplies and engineering group.

Hugh Pelham most recently served as global president at Minova, which is part of Australian Stock Exchange-listed Orica and a supplier of chemical and mechanical earth control products, adhesives and support equipment. He has also worked for Wood Group Industrial Services, where he was responsible for a team of over 2,000 people.

His broad range of experience will be useful at a company as diverse as Carr's, whose two divisions span technical engineering services for the nuclear, defence and petrochemical sectors as well as a network of country retail stores and fuel depots.

Carr's, which has been listed on the London Stock Exchange since 1972, has delivered a resilient trading performance during Covid-19. It has been helped by the agricultural sector being crucial in supplying raw materials and ingredients to the food chain, while its engineering business is predominately involved in government funded contracts in the nuclear sector.

Pelham's purchase of shares was made at a price of 134p, which compares with 95p in October and 157p prior to the pandemic sell-off.

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.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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