Whenever a director of an ASX 300 share sells a significant chunk of stock, it usually gets investors' ears up. But then the sum is $2.3 million? That's enough for all investors to pay attention.
That's what has just occurred over at ASX 300 furniture and homewares retailer Nick Scali Limited (ASX: NCK).
This morning, Nick Scali released an ASX notice that informed investors that its chair John Ingram has made a major stock move.
The filing informs us that Ingram made a large sale of Nick Scali shares between 8 and 12 February earlier this month.
Ingram offloaded a total of 156,551 shares over this period in on-market trades. That netted him a grand sum of $2.33 million.
This implies that Ingram achieved an average sell price for these sales of $14.88 per share.
Should investors be worried that an ASX 300 chair is selling shares?
No ASX 300 shareholder ever likes to see senior management of their company sell out of their stock. It's comforting for investors to know that the highly paid people running their business have significant skin in the game – that the financial fortunes of shareholders and management are one and the same.
But at the same time, ASX 300 management figures have financial obligations of their own. It's universally viewed as a poor financial practice to have the majority of one's wealth tied up in a single stock, even if it's one's job to help run that company.
As such, there are many legitimate reasons why an ASX 300 management figure can sell down shares of their own company that shouldn't bother shareholders. They could have a big tax bill, they might want a larger home or simply want to diversify their wealth.
It's hard to know what's going on in Nick Scali and Ingram's case though. The ASX filing shows that this was indeed a large sale of shares. Ingram offloaded 156,551 shares, leaving him with 200,000. In other words, in one fell swoop, Ingram has reduced his stake in Nick Scali by almost 44%.
Nick Scali shares on fire
A possible explanation is that Ingram is taking advantage of the recent surge in the Nick Scali share price. As recently as June 2023, Nick Scali was going for just $8.30 a share – almost half of what it is trading at today.
Since the company reported its latest (and well-received) earnings earlier this month, the company has jumped by an impressive 26.5% or so.
It's arguably likely that Ingram took note of this huge leap in value for his company, and decided that it was too good to pass up.
All in all, it's up to shareholders to determine whether Ingram's move is a red flag or not. I'd certainly be keeping an eye out for any future moves.
