Stake sale by chairman of Redrow causes alarm
SHARES in house-builder Redrow tumbled yesterday amid fears the sector has reached its stock market peak after Redrow founder Steve Morgan became the latest to offload a mammoth stake.
Redrow chairman Mr Morgan, who founded the group in 1974, offloaded a 7% stake in the firm worth £152.8m through his investment vehicle and a charitable trust.
The move sparked jitters throughout the sector, as Mr Morgan’s stake sale follows a move by Tony Pidgley, founder of housebuilder Berkeley Group, to offload his holding worth £26.8m last week.
Shares in FTSE 250 listed Redrow dropped more than 8% in its biggest fall since the Brexit vote, while Taylor Wimpey, Barratt Developments and Persimmon were all 2% lower in the FTSE 100 and Bellway and Crest Nicholson were also under pressure in the second tier.
Jefferies analyst Anthony Codling said: “When Tony Pidgley and Steve Morgan sell shares in the companies they founded, investors take notice and ask if the silverback alpha males in the sector are calling the top of the market.”
But he added they “do not think so” as Mr Morgan and his closely associated investment vehicles still own around a third of Redrow, while Mr Pidgley remains the fourth-largest shareholder in Berkeley.
Mr Codling also said the shortage of homes in the UK, together with last week’s robust reports and cheery outlook from a raft of house-builders signalled “performance is still climbing rather than reaching a plateau”.
Mr Morgan’s stake sale comes after he announced last week he was preparing to “ease back” from his executive role this year, news which came as the group posted a record set of annual results.
The firm, which has its headquarters in Flintshire, saw revenues rise 20% to £1.66bn in the year to June 30, while pre-tax profits rose 26% to £315m.