The founder of S&P/ASX 200 Index (ASX: XJO) stock WiseTech Global Ltd (ASX: WTC) has just sold more shares. So, is this a worrying a sign? I'll try to answer that below.
It's normally a good sign if management wants to buy shares on the market, it suggests they believe the share price is good value.
So, some investors may jump to conclusions about what a sale means for the ASX 200 stock. But there are lots of different reasons why someone may need to sell shares – it may be for property needs, a divorce or even a large tax bill.
How many WiseTech shares were sold?
It was recently announced that an entity largely owned by Richard White (founder and CEO of WiseTech) had sold 207,750 WiseTech shares last week for an average price of $89.28 per share.
This means he has sold shares worth around $18.55 million. That's a large sale by most people's standards!
Should this be a worry?
Not necessarily.
Firstly, while his entity did sell 207,570 WiseTech shares, it still owns 120,834,796 shares. That means the entity that Richard White owns 91.83% of still has more than $10.7 billion of WiseTech shares. That's a big vote of confidence, in my opinion.
There could be very reasonable reasons why White may have wanted to sell down shares. Perhaps he wants to diversify his wealth a bit more and/or add more liquidity for WiseTech shares. With such a large chunk of the ASX 200 stock unavailable for the market to buy and sell, it can create problems for institutions wanting to do large trades.
Roughly a year ago, Richard White personally sold 75,427 shares for an average price of $62.62 per share. The WiseTech share price climbed 42.6% between that trade a year ago and the one from last week.
There's no guarantee the company will be higher in 12 months, but it shows that a sale doesn't mean the ASX 200 tech share can't keep performing for shareholders.
Continuing profit growth
The recent FY24 first-half result from the ASX 200 stock showed growth, despite its heavy investment in software development and spending on acquisitions.
Total revenue rose 32% (with 15% organic growth) to $500.4 million, while earnings before interest, tax, depreciation and amortisation (EBITDA) grew 23% to $229.9 million. The underlying net profit after tax (NPAT) rose 5% to $128.4 million and statutory NPAT increased 8% to $118.2 million. Free cash flow improved 13% to $155.3 million.
The WiseTech dividend continues to grow too. The interim dividend was hiked by 17% to 7.7 cents per share.
WiseTech share price snapshot
The ASX 200 tech share has risen by around 30% over the past year, as we can see on the chart below.
