The chief product officer of IG has cashed out of a six-week spread bet on the shares of the derivatives trading platform, netting a profit of £54,409.
Matthew Brief — a 19-year veteran of the FTSE 250 firm — sold a derivative equivalent to 50,000 IG shares for £422,300 on September 18, the day after a scheduled trading update revealed revenues for the group’s August-end first quarter were up 62 per cent on the previous year.
That disclosure helped push up the stock by 6 per cent and allowed Mr Brief to cash out of the trade at a 15 per cent premium to the share price on August 7, when he first purchased the derivative. A regulatory filing of the transaction did not disclose how much leverage Mr Brief used in the spread bet, a type of high-risk wager on the price move of a security which, unlike contracts for difference, are exempt from capital gains tax.
It is unusual for directors of publicly-listed companies to make leveraged bets on the share price movements of their firms, or trade over such short timeframes. IG declined to comment, though we understand the executive did not make the trade on the platform he helps to manage.
However, Mr Brief was not the only insider to cash in on IG’s share price rise following the trading update. On September 18, chief risk officer Joe McCaughran made two sales worth a combined £70,554, while his wife Helen McCaughran disposed of the 10,000 shares he had transferred to her a day before — the same day Mr Brief also transferred 9,000 shares to his wife Jasmin.
It is usually alarming when a company sheds over two-fifths of its market value in just one week, as Network International did between September 14 and 21. But more surprising is the fact that it simply is not clear why the share price tumbled by so much – even prompting a business update from the payments company, who said it was “not aware of any reason to justify the move”.
A wave of share purchases by five directors between September 18 and 21, with an aggregate sum of £400,000, was perhaps then an attempt to shore up confidence in the stock. Indeed, the company said in a statement that the buys “demonstrate the confidence that Network International directors have in the long-term growth prospects of the company”. The purchases — as well as a brief note emphasising that the volume of payments it had processed were steadily improving in August and September — did offer some reassurance to investors, and the shares have now rebounded by about a quarter.
But the market is right to be cautious about Network International. While the pandemic has accelerated the shift to cashless payments, a nosedive in consumer spending has dealt a serious blow to its income statement. Pre-tax profits crashed 90 per cent in the six months ended in June and management has warned that it expects sales will drop by as much as a fifth in 2020.
Nevertheless, the company is pushing ahead with the $288m (£227m) purchase of DPO, an online commerce platform in Africa, which will be funded partly by a £205m equity raise back in July. The acquisition is expected to complete towards the end of this year.