There is a rising suspicion in the market these days of businesses when leadership sell some of their shares.
There's usually only one reason management buy shares – they think it's good value. But there's usually a myriad of reasons for selling such as divorce, needing cash for X and so on.
Today, Medical Developments International Ltd (ASX: MVP) announced that its Chairman, Mr David Williams, had sold five million shares off-market at $7.50 per share. Selling a total of $37.5 million is not small change.
Medical Developments International included a quote from Mr Williams explaining his reasoning about why he sold, "MVP recently completed a three-week roadshow where 48 financial institutions from Europe, Asia and Australia were presented the MVP story. As a result of those meetings there was strong demand for shares and for more liquidity from a number of financial institutions through Jeffries Securities of Hong Kong and Bell Potter in Australia.
"I remain MVP's biggest shareholder and own 8,671,045 (14.67% of MVP stock). As Chairman I am delighted and proud of the progress MVP is making and I view the strong demand from financial institutions as a vote of confidence in the future of MVP. We are quickly building a global business and a global shareholder base. I am told the shares sold yesterday went to funds in Australia, US and UK."
Foolish takeaway
It's probably a good thing that financial institutions want a piece of Medical Developments, so perhaps it's a good thing that Mr Williams sold some shares, selling over a third of the shares is a big move. However, only the future can tell whether the timing of the sale will lead to a price decline as other companies have seen in the past.
