Impax chiefs sell £1m in stock

Investor flows to sustainable funds currently resemble a tidal wave. This week, the ESG-focused Liontrust Asset Management (LIO) said net client inflows hit £792m in the quarter to December. By Monday, the asset pile stood at £30.1bn, up 87 per cent since April.

Organic growth at Alternative Investment Market-listed peer Impax Asset Management (IPX) has been even better, having grown managed assets from £20.2bn to £25.2bn in the last three months of 2020.

Is this momentum itself sustainable? It is a question that Impax investors might have asked themselves this week, after chief executive Ian Simm and chief financial officer Charlie Ridge followed that trading update by selling 100,000 and 28,333 shares, respectively.

Though the disposals were “partly” to satisfy tax liabilities linked to share awards, they are not the first time the company’s top brass have sold into share price strength. In December, Mr Ridge made a separate sale of 66,666 shares at 710p a go, and was soon followed by Mr Simm, who cashed out of 20,000 shares, again in part to cover tax liabilities.

Nor are Impax’s directors alone in their disposals. On 25 November, with Liontrust's stock close to an all-time high after the publication of half-year numbers, the group's chief executive John Ions and chief operating officer Vinay Abrol both trimmed their holdings by 15,753 shares, each netting £223,223.

Investors feeling unnerved by this activity should maintain some perspective. Not only are these directors still heavily invested in both businesses – Messrs Ions and Abrol own a combined £29m of Liontrust stock, while Mr Simm’s stake exceeds £100m, per FactSet – but appetite for greener and more socially responsible businesses looks set to stay, even if some funds’ heavy weightings to tech stocks are a near-term vulnerability.

Though growth prospects remain strong for both, Impax shares look richly valued on 39 times forward earnings, versus a more reasonable 19 times for Liontrust - our current preference. Hold Impax at 853p.

Last IC view: Hold, 618p, 3 Dec 2020