The spotlight has returned to waste management group Biffa (BIFF) after yet another director sold shares in the company.
Six directors in the business sold nearly £3m stock in late November and early December, including the chief executive and chief financial officer.
It has now been disclosed that Jeff Anderson, managing director of Biffa’s Industrial & Commercial division, sold £562,830 worth of shares on 17 December.
Biffa used to be part of Severn Trent (SVT) until it was demerged in 2006 and floated on the London Stock Exchange. Two years later it was acquired by two private equity groups and remained an unlisted business until returning to the stock market in October 2016.
Directors weren’t allowed to sell any shares for 12 months after the 2016 flotation. The end of the lock-up period happened in October 2017, giving directors the first chance to cash in some or all of their stock.
A large number of directors selling shares is normally a negative sign as these are the people who know a business the best. Selling can suggest they don’t have faith in the company’s ability to generate additional value in the future.
Biffa’s situation looks a bit different. It is natural for some directors in a former unlisted business to crystallise some value in their personal holdings, given this is the first chance they will have had to sell their stock on the market and enjoy the financial benefits of rewards that were previously locked away.
We would only be worried if the company had been listed for many years as a pack of directors selling in that situation could imply something is wrong.
Biffa is one of our top share picks for 2018. We believe its shares are undervalued given it is forecast to grow profits by a decent amount over the next few years and it operates in a defensive market.
SHARE SALES BY BIFFA DIRECTORS SINCE NOVEMBER 2017: REPORTED TRADES
Jeff Anderson, managing director, Industrial & Commercial: £562,830
Jeff Anderson, managing director, Industrial & Commercial: £6,919
Mick Davis - managing director, Resource Recovery & Treatment £12,869
Michael Topham, chief financial officer: £80,640
Michael Topham, chief financial officer: £481,559
Michael Topham, chief financial officer: £9,601
Ian Wakelin, chief executive: £1.89m
Ian Wakelin, chief executive: £38,438
Jane Pateman, HR director: £92,050
Jane Pateman, HR director: £13,150
David Gooding, IT director: £44,200
David Gooding, IT director: £59,800
