Whenever an insider of an ASX 200 stock buys up additional shares of their company, investors tend to approve.
After all, it's always nice to see the highly paid managers of an ASX 200 stock bring their financial interests closer to those of the shareholders who are paying them to run their company.
But conversely, investors don't usually like to see managers and insiders sell out of their company, for the opposite reason.
Unfortunately, it is the latter scenario that investors in ASX 200 building materials stock Brickworks Ltd (ASX: BKW) have to contemplate today.
Two separate ASX filings over April show that Brickworks managing director Lindsay Partridge AM has recently offloaded a significant chunk of shares.
The first filing from 11 April reveals Partridge sold 46,598 shares held within the company's employee share purchase plan. As well as 25,000 shares held in a private investment company KASS Investments. These sales occurred between 4 and 10 April.
At the same time though, Partridge also acquired 20,558 shares using Brickworks' deferred employee share plan.
Then, a 24 April filing revealed Partridge sold a further 100,000 shares of this ASX 200 stock via KASS Investments in an on-market sale. That was for an average sale price of $27.13 per share. That sale alone would be worth a cool $2.71 million.
Should investors of this ASX 200 stock be worried about this sale?
Insider sells of an ASX 200 stock are never a good look from a shareholder perspective. However, it is worth keeping in mind that many directors follow one of the basic rules of prudent wealth management – diversification of investments.
No serious financial adviser would ever recommend having the majority of one's wealth tied up in a single company's stock. As such, it's hard to criticise an insider for ensuring that their own financial foundations are sound by diversifying away from a single large holding.
But it is also important to shareholders that their managers retain a sizeable amount of 'skin in the game', as it were.
In Partridges' case, he still owns 125,000 Brickworks shares through his indirect holdings. As well as 24,604 shares through the Brickworks employee share scheme.
At the end of the day, it's up to ASX 200 stock market investors to decide if they approve of Partridge's moves, and invest accordingly.
