Kenny Alexander spooks GVC investors after share sell-off
GVC share price drops 16% as the City reacts to Alexander’s decision to sell £13.7m of stock in the London-listed operator
GVC Holdings CEO Kenny Alexander took the gambling industry by surprise this morning after selling more than two million shares in the operator for £13.7m.
Alexander sold 75% of his shares in the London-listed firm just three days after GVC’s full-year results were announced, in which revenues climbed 9% to £3.6bn.
GVC chairman Lee Feldman also cashed in, selling 900,000 shares in the business for £6m. Alexander has 1.2 million shares remaining, while Feldman is left with 300,000 following the transaction.
In a statement Alexander reassured investors he was not planning to leave the firm any time soon.
He said: “We have both held large personal shareholdings in GVC for a long time and continue to do so.
“Both of us remain fully committed to GVC and, whilst I continue to have the support of our shareholders, I’m here for the long term and at the very least I have a current plan that will take three plus years to accomplish.
“We reported excellent results earlier this week and we both remain convinced of the exciting prospects for the business.
“Therefore while we continue at GVC we will not reduce our holdings below the current levels,” he added.
On Tuesday, GVC Holdings CEO Kenny Alexander offered to bet me £10,000 that he'd get the betting group back in the FTSE 100 within six months. Perhaps I should have taken the bet: shares down 15% after CEO and chairman dumped almost £20m of stock
— Dominic Walsh (@walshdominic) March 8, 2019
According to several analysts, investors are unhappy with the decision and the City remains in the dark as to the reason behind the sell-off.
One analyst, speaking off the record, told EGR Intel it was a terrible morning for his Buy recommendation. “We think Kenny had to commit to at last three years for at least the beginning of its US strategy to play out,” he said.
“Nevertheless, a disposal this material at a share price 45% below their peak last August will naturally spook investors,” he added.
Another City trader described the news as “extremely concerning” for GVC’s share price.
“With Kenny and Lee selling a significant portion of their personal shares just three months after Kenny promising that he would increase the share price to £20 within 3 years, the directors are clearly cashing in on short-term gains posted last week following the 2018 earnings, and hedging their personal bets against the impending FOBT challenges.
“Presumably the directors hope that the medium term outlook will offset any short term drops, but that’s assuming the business will weather the impact of the looming FOBT storm.
“Also, the city doesn’t usually suffer from short term memory, so this could affect longer term investor confidence in this stock.”
GVC’s share price was down 16% at the time of writing.