This week Steve Morgan, founder of Redrow, sold shares worth 7% of the firm for £153m. It followed the decision of a host of senior directors at Berkeley Group to sell shares worth a total of £45m at the end of last week, the largest amount sold by directors or their families in more than a decade according to Olivetree Financial.
Earlier this week directors of Irish builder Cairn Homes also cashed in a substantial amount of shares, prompting analysts to question whether this represents sector leaders suggesting the market has peaked.
The sales have led to significant share price falls in housebuilders. Redrow for example saw its share price drop from 633.50 to just 577.50 yesterday, and it has only slightly improved since then. Berkeley Group’s share price has dropped from a high of 3,707 last week to as low as 3,501 this week.
Morgan recently announced he intended to take a step back into a non-executive role at the builder, adding: “It is my intention to continue to focus with the board on the strategic development of the business and I will retain my keen involvement with the product and key important projects.”
Jeffries analysts issues a note in response titled ‘Gurus calling the top?’, which suggested the sales were somewhat surprising given the current housing shortage and government backing for the housebuilding sector in the form of the Help to Buy scheme.
It said: “When Tony Pidgley and Steve Morgan sell shares in the companies they founded, investors take notice and ask if the silverback alpha males in the sector are calling the top of the market.”