The BHP Group Ltd (ASX: BHP) share price is up another 1% today amid news that rate cuts in the US may be on the horizon. However, there's a negative piece of news for investors to digest: the CEO Mike Henry has just enacted a huge sale.
Investors can sometimes see it as a sign to worry about the valuation when management decide to sell.
Major BHP share sale
On 8 December 2023, Mike Henry sold 394,760 BHP shares for $47.55 per share. That translates into a total sale worth $18.8 million.
He also re-organised his remaining holdings by transferring 325,330 BHP shares to HSBC Bank Australia in a shareholder account of which Mike Henry is the sole beneficiary and transferring 84,671 shares to HSBC Security Services Asia Pac.
Why the sale?
BHP explained the changes were in relation to a marital divorce, including the reorganisation of the holdings.
Is this a worry?
Clearly, a divorce is a legitimate reason for Mike Henry to need to adjust his assets. He's not just selling for the sake of it.
The market can't know the intricate details relating to if/when these transactions need to happen. But, it is interesting this sale has happened after an 11% rally of the BHP share price from 23 October 2023 to now.
It's possible that Henry thought this was a good time to sell while the BHP share price and iron ore price are strong. According to Trading Economics, the iron ore price is close to US$140 per tonne, the strongest it has been for a year and a half.
BHP share price could stay high
Amid the ongoing strength of the iron ore price, the broker UBS believes the commodity can continue to do well over the next two years, supported by "low inventories, robust demand and limited supply growth."
Due to that, UBS recently increased its price target on BHP shares by 12% to $48. That suggests the valuation could be very similar in 12 months if UBS is correct.
