Shares digital

The group gave one reason for its chairman’s dealings but a different explanation has emerged

by Dan Coatsworth

Property prices may have suffered their first annual drop for 12 years, according to figures from Nationwide building society, but that hasn’t deterred the executive chairman of social housing and compliance services group Connaught from scouting the market. Mark Tincknell has sold £8.4 million worth of shares in the business to provide funds for buying a new house.

The rationale behind the sale of 2.25 million shares at 375p each seems fair, but it wasn’t the reason given to the stock market and investors. Connaught said Tincknell had sold nearly two-thirds of his shares to satisfy institutional demand. The real reason behind the director dealing was only disclosed when Shares raised questions with the company’s advisers.

Connaught is a FTSE 250 business with adequate share liquidity. Its recent half-year results showed continual growth within the business and provided investors with a good opportunity to either take some profit – the stock has more than quadrupled in value in the past three-and-a-half years – or sit tight and enjoy the appreciating share price. To suggest that institutions were having trouble picking up stock seems a bit crafty on Connaught’s part. That said, the line is often used by companies wanting to cover up the personal reasons behind directors’ share dealings, typically divorce or to settle a tax bill. One could argue that in this age of tighter corporate governance, the real reasons behind any director dealing must be disclosed. On the flip side, it is the directors’ own money funding the shares, so they have every right to keep the reasons behind dealings private.

Having sold a good chunk of shares at the top of the market, Tincknell and his wife Caryl are left with 1.3 million shares, roughly 1% of Connaught’s issued share capital. This doesn’t include an additional indirect holding, where last month the chairman transferred 2.25 million shares into a trust of which he is the primary beneficiary.