Greg Goodman, the CEO of Australia's biggest property business, Goodman Group (ASX: GMG), has just sold a significant amount of shares of the S&P/ASX 200 Index (ASX: XJO) business.
When a company's leadership figures decide to reduce their holdings, it can be a worrying sign. An insider sell-down may suggest to investors that bad news is incoming or that the share price is fully valued (or even overvalued).
So, while there may be a legitimate reason when an insider sells shares, the market would prefer to see share purchases. Let's see what's been happening at the Goodman Group.
Major share sales
In the last two weeks, Greg Goodman has made three significant sales on the market.
The latest was on 20 September, when he sold 621,335 Goodman shares for total proceeds of $22.84 million. That works out to be an average price of approximately $36.76 per share.
The CEO also conducted two other sales of the ASX 200 share on 17 September.
In one transaction, Greg Goodman sold 566,667 Goodman shares for $20.19 million. That translates into an average price of around $35.63.
In the other transaction, he sold 333,333 Goodman shares for total proceeds of $11.88 million, which works out to be an average price of approximately $35.63.
The company noted with this sale that the securities were acquired on the vesting of Goodman performance rights.
Should investors worry about this sale?
It is curious timing that these sales have occurred after the 44% rise of the Goodman share price since the start of 2024.
It isn't certain that these sales herald bad news. Other ASX 200 shares, such as Pro Medicus Ltd (ASX: PME) and WiseTech Global Ltd (ASX: WTC), have seen sales by their leaders and continued to deliver good shareholder returns over time.
It's not as though Greg Goodman no longer owns shares in the company. He still indirectly owns approximately 37 million Goodman shares, which have a value of approximately $1.34 billion. The CEO is still vastly aligned with regular shareholders, so any future declines would significantly impact his wealth.
If the sales were to diversify his wealth, I think that's a fair enough reason. We all know how diversification is an important element of investing.
The Goodman Group's FY24 result was solid, with operating earnings per security (EPS) growth of 14% to 107.5 cents. It expects operating EPS growth of 9% in FY25.
With the FY24 result, Greg Goodman himself said:
The outlook for the group remains positive with the active rotation of our capital a key factor in funding sustained earnings growth over the long term, as part of the group's strategy to maintain a prudent level of financial leverage.
While our logistics offering remains core to the business, with sound underlying fundamentals expected to be maintained, data centres are anticipated to be a major area of growth moving forward.
We are in active negotiations with several customers for powered shell and fully fitted turnkey facilities across our power bank, with substantial new starts anticipated to commence between now and the end of 2025.
That sounds as though the ASX 200 share's CEO is still positive on the business.
