AJ Bell chiefs top-slice holdings

On 30 December – with AJ Bell (AJB) shares up for 2020 after a wild year for financial markets – chief executive Andy Bell and Investcentre managing director Fergus Lyons cashed in stock worth £16.7m and £8.1m, respectively.

The transactions mark the latest of several rounds of insider selling since the DIY investment platform went public in 2018. Both Mr Bell and Mr Lyons participated in the sale of almost £50m-worth of shares by directors and senior executives in December 2019, which was followed by a £5.6m share sale by Mr Lyons last May and a £7.8m disposal by the chief executive last August.

Viewed against their remaining holdings, the latest sales are slight: Mr Bell continues to hold more than 93 million shares, worth £411m at the current price, while Mr Lyons’ residual interest stands at a still-chunky £69.5m.

But on a longer time horizon, both men have reduced their exposure to AJ Bell shares, even as the group’s market valuation has climbed. Including stock sold at the group’s initial public offering, Mr Bell’s and Mr Lyons’ shareholdings have fallen by a fifth and almost a third, respectively, in just over two years.

Investors tempted to view this as a bearish sign should consider whether they would take some money off the table after building up a successful business over decades. We expect they might. That, after all, is one of the benefits of a public listing – amid all the scrutiny this brings.

Our view of the shares is unchanged. Though AJ Bell trades at an eye-watering 49 times’ forward earnings, this reflects long-term secular trends and growth plans it would be unwise to bet against. Investors should look to bank some profits whenever frothy sentiment returns – as it almost certainly will – but hold for now at 441.5p.

Last IC View: Hold, 436p, 3 Dec 2020