personal finance

Ocado directors buy in as shares wobble

Two Ocado directors bought shares in the company last week, taking advantage of a wobble in the share price following the release of a mixed 2020 full-year result. Non-executive directors Richard Haythornthwaite and John Martin both bought about £100,000 worth of shares, after the market knocked 5 per cent off the group’s value over the course of last week. 

The grocer, which now bills itself as a technology company and has a valuation to match, failed to impress its shareholders. Adjusted cash profits at its retail business, a joint venture with Marks and Spencer, more than tripled, but the group logged deeper losses at international solutions, the division which sells its proprietary warehouse software and is viewed as its long-term driver for growth. 

Pre-tax losses narrowed to £44m compared with £215m in the previous year, and the company is making decent gains in market share. Ocado’s addressable markets are worth £2.8tn, of which its partners already represent 7.5 per cent — but we would have expected that 2020 would have been a bumper year for adding new corporate customers to its automated warehouse business. The absence of new partnership announcements was conspicuous.

Ocado did not offer a comment on Haythornthwaite and Martin’s transactions, but the new buys might help shore up confidence in the sustainability of the shares’ current trajectory. Excitement about rapid growth in the online grocery market was their main driver last year, but it is still not clear if Ocado’s technology will be a hit with corporate clients in the long run.

Hargreaves Lansdown co-founder Peter Hargreaves has sold shares worth £300m via a placing with institutional investors. The accelerated book build was completed at 1,535p a share, a 7 per cent discount to the closing price on the day of the deal’s announcement.

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Hargreaves retains a holding of almost 20 per cent in the investment platform provider, and remains the largest shareholder followed by Lindsell Train and group co-founder Stephen Lansdown.

The raising of such a vast sum, which was equivalent to about 17 per cent of Hargreaves’ holding in the group, could be viewed as another indication of the market’s ebullience in recent months. Hargreaves Lansdown declined to comment on the transaction. 

On the same day as Hargreaves’ disposal, Dunelm disclosed that deputy chairman Will Adderley had sold 15m shares worth £192m via an accelerated bookbuild. The transaction, equivalent to 7.4 per cent of the issued share capital of the group, takes the stake of Adderley and his family to 43.2 per cent. 

The group said that the sale was aimed at “achieving greater portfolio diversification” on the part of Adderley, who last disposed of shares in the retailer in 2016.

This month, Hargreaves revealed that net client flows had surged 40 per cent during the six months to December, as retail investors sought to benefit from equity markets. First-half trading figures came in ahead of analyst consensus forecasts, prompting a series of upgrades to earnings forecasts for the 2021 financial year. 

The shares trade at a forward earnings multiple of 26, a substantial discount to smaller rival AJ Bell. Whether the pace of client inflows will continue is difficult to predict, but investors might take comfort from the platform provider’s impressive 92.9 per cent client retention rate.


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