The Motley Fool

Xero founder reportedly selling $116 million of shares

The Xero Limited (ASX: XRO) share price will be one to watch this morning after reports emerged claiming that the business and accounting software provider’s founder and non-executive director, Rod Drury, is looking to sell a large number of shares.

According to the AFR, Mr Drury is looking to offload 2 million shares via a bookbuild with a $58.00 per share floor price.

Based on the floor price, this works out to be a total consideration of $116 million and would be a discount of approximately 2.35% to the last close price of $59.40.

The report reveals that Credit Suisse was hired to oversee the block trade and was seeking buyers after the market close on Monday.

Should you be concerned?

I wouldn’t be overly concerned by this share sale as Mr Drury will still retain an 11.2% stake in the company if these shares find a buyer. I believe his interests are firmly aligned with shareholders.

However, as the AFR points out, there has been a large amount of insider selling recently, which appears to have some fund managers concerned.

In recent weeks heavy insider selling has been clocked at infant formula company Bubs Australia Ltd (ASX: BUB), international student placement services company IDP Education Ltd (ASX: IEL), lottery ticket seller Jumbo Interactive Ltd (ASX: JIN), infection control specialist Nanosonics Ltd (ASX: NAN), aerial imagery technology and location data company Nearmap Ltd (ASX: NEA), and global wine giant Treasury Wine Estates Ltd (ASX: TWE).

What does this mean?

Insider buying is often regarded as a bullish indicator as few people know a company better than its own directors.

The theory is that if they have the confidence to buy shares, it could be a sign that things are going well and they expect them to appreciate in value.

Conversely, when directors sell shares it is often regarded as a bearish indicator as you’d be unlikely to sell shares if you felt they were about to increase in value.

Is this a sign that the market is peaking? Only time will tell, but I’m optimistic that it is not.

Overall, I think now could be the time to buy these dirt cheap shares which have recently been rated as buys. I believe they still have plenty of upside ahead of them over the next few years.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

Stock #1 is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Stock #2 is another high-growth business trading near a 52-week low all while offering a 4.7% grossed-up yield...

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.


James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Jumbo Interactive Limited, Nanosonics Limited, and Nearmap Ltd. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. The Motley Fool Australia owns shares of Xero. The Motley Fool Australia has recommended BUBS AUST FPO, Nanosonics Limited, and Nearmap Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now