The Magellan Financial Group Ltd (ASX: MFG) share price sank deep into the red in early trade before recovering.
At the time of writing, the fund manager's shares are flat at $9.63.
What's going on with the Magellan share price?
Investors were hitting the sell button again at the open after Magellan announced that its co-founder, Hamish Douglass, had made a major share sale.
According to the release, Douglass informed Magellan that an entity associated with his family has sold approximately 13 million ordinary shares.
This was undertaken yesterday evening via an after-market block trade at a price of $9.10 per share. This represents a 5.5% decline to the Magellan share price at yesterday's close and values the parcel of shares at approximately $118.3 million.
The release also highlights that the Douglass family entity has entered into an undertaking with a Barrenjoey Group entity that undertook the block trade, not to sell any additional shares in Magellan for 12 months.
Based on recent disclosures, this sale will have taken Douglass' holding from 21.45 million shares to approximately 8.45 million shares.
Why did Douglass sell $118 million worth of shares?
The release notes that Douglass has further advised that the reason for the share sale was for family diversification purposes. He explained:
I have full confidence in the Magellan investment team including the global equities team led by Nikki and Arvid. Consistent with my confidence in the team I have not sold any of our investments in any Magellan funds.
It's a shame he didn't sell those shares earlier. At the start of 2022, the Magellan share price was fetching $19.00. This means that those 13 million shares would have had a market value of almost $250 million at that point.
