BP Marsh - the market reacts as the founder restructures his wealth
Analyst’s view:
A large insider sale is never a positive event. But this is a case where there are many mitigating circumstances. The most obvious one is the fact that an octogenarian may wish to restructure their wealth for reasons that have little to do with the financial prospects of what is being bought and sold. In my view, the biggest questions here are around the ability of the existing management team to continue BPM's legacy of strong returns. So far, I have few reasons to doubt them.
Down 6% at 662p (£239m) - Secondary Shares Sale & Update on Secondary Share Sale
[Disclosure: at the time of publication, Graham has a long position in BPM.]
It's always a sensitive topic when insiders are selling shares, and that's particularly the case when we are talking about a founder who literally named the company after themselves.
At the age of 85, Brian Marsh has remained the largest shareholder here by some distance:
Last night, he announced an intention to sell £11m of shares at a price of 650p per share.
This morning, the result was announced: £15.2m of shares were sold at that 650p price. His holding has reduced by 2.3 million shares. That's about one sixth of his holding prior to the sale. It's also 6.5% of the entire company.
Graham's view
Firstly, I should be clear that a large insider sale is never a positive event.
But this is a case where there are many mitigating circumstances.
Firstly, Brian Marsh remains deeply involved in the company as non-Executive Chairman, and the management team he nurtured for many years continues to run the business.
As for the share sale itself, the fact that it was upsized from £11m to £15.2m could be seen as a positive: there was clearly very strong demand at 650p.
That is perhaps not a surprise considering that the share price closed yesterday at 705p.
I view this as the one major negative: that Brian Marsh was willing to accept a near-8% discount to the prevailing share price. This suggests some degree of urgency or at least determination to get the deal done.
At the interim results, the diluted NAV per share was reported at 996p. The fact that this sale has taken place at a 35% discount to that level does not reflect too well on that NAV figure.
But finally, I should mention the obvious fact that an octogenarian may wish to restructure their wealth for reasons that have little to do with the financial prospects of what is being bought and sold.
In my view, the biggest questions here are around the ability of the existing management team to continue BPM's legacy of strong returns. So far, I have few reasons to doubt them.
I've been moderately positive on this stock and will therefore retain that stance today.
At the time of publication, Graham has a long position in BPM.
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Discussion on B.P. Marsh & Partners (3)
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B.P. Marsh & Partners (LON:BPM) Surprised no comments so far on the discounted sale by the founder. Wonder who has bought in - a bunch of buyers or just one or two - New or existing. Either way, todays Mkt reaction was predictable.
B.P. Marsh & Partners (LON:BPM)
thats what old age will do to you - note i think he is now 85 so i dont think you can ever say someone of that ilk is "rushing to the exit" to beat current shareholders..
Note some might say they have invested extra in one of their biggest investments "at healthy price" recently and that might have supported good valuation that helped the most recent results look good. Personally as long term holder i am 100% happy here - i personally dont read any negative into 85 year old cashing in their chips - he deserves all he has got - people can head for the door if they dont like it.
Obviously the market takes the viewpoint if he is happy to sell wad at 660p then ......... its now worth less - so it might take future "decent results" for this to be return to norm and be forgotten about.
like anyone who holds shares when price at or near "all time highs" - well do we blame anyone for selling up at that time ?
Lets hope Mr Marsh is in rude health and that there arent any health issues triggering this sale.
I used this opportunity this morning to top up. Been a long-term holder of this and as long as the company continues to perform as it's I have no reason to sell down