Builders shares sink as bosses take £177m profit
NEARLY £177m worth of profittaking by bosses at Redrow and
Cairn Homes led housebuilders to fall across the board yesterday, as investors became increasingly worried that the sector’s top brass are calling the top of the market.
Steve Morgan, chairman and founder of Redrow, sold a total of 25.9m shares in the firm through his investment company Bridgemere Securities and his charitable trust, The Steve Morgan Foundation.
At a sale price of 590p per share, Morgan’s two vehicles fetched a total of around £ 153m, with Bridgemere retaining a 25.5pc stake in the firm following the sale and the foundation retaining an interest of around 7pc.
Meanwhile, Michael Stanley, chief executive of Cairn Homes, alongside chief commercial officer Kevin Stanley and founder Alan McIntosh, sold 15.7m shares at €1.70, pocketing the trio a tidy £24m.
The news sent shares in Redrow down by 8.3pc, or 52.5p, to 580p – the firm’s sharpest fall since Brexit – while Cairn Homes fell by 3.8pc, or €0.07, to €1.70 yesterday. But with the sales following a similar £45m share dump by top brass at
Berkeley Group (down 1.25p, or 45p, to 3547p) last week, the market began to worry that housebuilding bosses have called the top of the market, and shares slipped across the board.
Shares in Bellway were down 1.7pc, or 54p, to 3110p, Persimmon edged down 2pc, or 52p, to 2503p, Bovis Homes sank 1.5pc, or 17p, to 1089p, and Taylor Wimpey fell 1.4pc, or 2.7p, to 193.1p.
Despite noting the volume of ‘silverback alpha males’ selling their shares, Jefferies’s analysts said the housebuilding sector still has a way to go, with UK homes remaining in chronic under supply. In particular they noted the strong swathe of results in the sector last week, with Barratt
Developments (down 1.65pc, or 10p, to 596p), Bovis Homes and Redrow all issuing clear and upbeat medium-term guidance.
The broker even went so far as to encourage investors to add to their holdings during this period of weakness.
‘We appreciate that results are backward looking and that medium-term guidance is aspirational rather than hard fact, but Redrow had a record forward order book, up 14pc at £1.1bn,’ Jefferies said.
‘This suggests to us that performance is still climbing rather than reaching a plateau.’
The FTSE 100 fell 0.17pc, or 12.90 points, to 7400.69, after the pound rose to its highest level in a year on the back of stronger-thanexpected UK inflation in August.
In the small- cap index, energy firm Premier Oil rose by 1.3pc, or 0.75p, to 58.5p, after confirming the sale of its 34pc stake in Wytch Farm, Britain’s largest onshore oil field, for around £151m. Premier will sell its stake in the Dorset-based site to fellow oil and gas firm Verus Petroleum and will use the proceeds to pay off its existing debt.
Investors in Tasty were left feeling queasy after the restaurant operator reported that turnover and profit have been hit by weak consumer spending so far this year, a problem which it expects to continue into 2018.
The firm, which has seen a particular loss of appetite in London, said like-for-like sales declined by an unspecified amount while total losses came in at around £9.3m.
The operator of Wildwood and Dim T restaurants has attempted to combat the slowdown by shutting underperforming restaurants and scaling back its new site openings.
It has also looked at reducing the number of dishes on its menus, echoing similar steps taken by struggling Frankie & Benny’s owner Restaurant Group (up 3.1p, or 9.5p, to 312p) earlier this year. Shares fell 11.9pc, or 5p, to 37p.