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Why Treasury Wines is the most traded share on the S&P/ASX 200 today

The Treasury Wine Estates Ltd (ASX: TWE) share price is down 11.5% to $16.46 this morning and is the most heavily traded stock by volume on the S&P/ ASX200 (ASX: XJO).

Close to 13.4 million shares worth around $220 million have changed hands already today and all on the back of the news that its CEO, Michael Clarke, is to leave the business in around 12 months’ time. 

The share price reaction has been so strong as analysts and the company’s board have widely credited Mr Clarke as the man behind a stunning strategic turnaround for the business.

Much of the CEO’s strategy has been based on expanding margins via the “premiumisation” of its products or better branding. Wine drinkers are often guided by brand perception with unconventional labels making wines stand out in markets such as the US. 

On the surface Treasury has a great recent track record of growth with the 25% EBITS growth delivered in fiscal 2019 being backed up by a forecast for 15%-20% EBITS growth in fiscal 2020. 

Mr Clarke has also been successful in talking down short sellers who have labelled the company over-valued and accused it of other dubious business practices.

Notably though Mr Clarke has also been a big seller of shares himself, with his decision to leave not inspiring confidence as it may mean he plans to offload more shares down the line. 

The large volume of shares being traded today also suggests some powerful institutional investors are taking some risk off the table. 

Other businesses looking to leverage the rise of the Chinese middle class include Blackmores Limited (ASX: BKL), the a2 Milk Company Ltd (ASX: A2M) and takeover target Bellamy’s Australia Ltd (ASX: BAL).

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Motley Fool contributor Tom Richardson owns shares of A2 Milk and Dicker Data.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has recommended Blackmores Limited and Treasury Wine Estates Limited. 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.

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