Calling the top? Builders shaken by latest director share sell-offs
DO housebuilding bosses know something we don’t?
That was the question investors were asking as Steve Morgan, the founder of Redrow, became the latest housebuilding chief to offload shares in his company.
He sold £76 million shares in the FTSE 250 firm through his Bridgemere Securities vehicle, days after saying he would take a back seat as non-executive chairman. His charity, The Steve Morgan Foundation, sold the same amount.
Morgan will retain a 25.5% stake in the business, with the charity holding on to 7%. The placing was conducted by Barclays. The shares slumped 45.67p, or 7%, to 586.28p.
It coincided with a €27 million (£25 million) proposed placing by the founders of Irish housebuilder Cairn Homes, which slipped 5 cents, or 3%, to €1.72 a share. Cairn floated in London two years ago at €1 per share.
Michael Stanley, Kevin Stanley, and Alan McIntosh, who also founded pubs giant Punch Taverns, plan to sell 15.7 million shares in Cairn through an accelerated bookbuild. Last week, Tony Pidgley and Rob Perrins, the chairman and chief executive of Berkeley Group respectively, dumped shares in the upmarket builder for a combined £45 million.
Yesterday, Springfield Properties, a Scottish housebuilder, unveiled plans for an AIM float. Investors were jittery that the wave of selling was a sign that the housing market might be reaching the top and sold off the sector. On the FTSE 100, Taylor Wimpey dropped 4.43p to 191.38p, Barratt Developments was off 10p at 596p, and Persimmon lost 37p to 2518p. Joining Redrow lower on the mid-cap index was Berkeley, down 46p at 3546p, and Bellway, 39p cheaper at 3125p.
Jefferies analyst Anthony Codling said he does not think the share sales by “silverback alpha males” Pidgley and Morgan mean the market has peaked. “It is our assessment that the UK continues to experience a chronic undersupply (or chronically inequitable distribution) of housing,” Codling said.
The FTSE 100, down 15.83 points to 7397.76, lost early gains after the sharp rise in inflation last month, which boosted the pound.
Whitbread sank 94.92p, or 2.5%, to 3679.67p as Citi slashed its rating from Buy to Sell, concerned by slowing growth at Costa Coffee and Premier Inn. The investment bank said it had underestimated the rise of Airbnb and online travel agents such as Booking.com and said the sharing economy was starting to have an impact on Premier.
British Airways owner IAG drifted 10p lower to 597.5p after Morgan Stanley downgraded to Equal Weight on the prospect of low-cost carriers such as Norwegian ramping up their transatlantic efforts.
Premier Oil rose 1.44p to 59.06p after agreeing to sell its stake in the Wytch Farm oilfield in Dorset. @jamienimmo63