ASX growth shares have taken a beating over the last year and a half. But I think there are opportunities to pounce on before a possible recovery.

Just because something has gone down doesn’t automatically mean it’s going to rise again. But the two businesses I’m going to talk about have seen significant falls, even though their futures looks promising.

I think their current valuations look really good for the long term.

SiteMinder Ltd (ASX: SDR)

SiteMinder describes itself as a hotel technology provider. It says it’s the world’s number one channel manager and hotel booking software provider.

Over the past year, the SiteMinder share price has dropped by more than 30%, making it much better value in my opinion. This decline has happened even though travel demand has soared.

The quarterly update the business announced last week was very promising, in my opinion. Revenue rose 28.7% year over year to $37.3 million, while annualised recurring revenue (ARR) increased 28.5% year over year to $150.3 million.

It also said that net subscriber additions accelerated, as did the uptake of transaction products.

The ASX growth share is still seeing underlying free cash outflows ($8.5 million for the quarter), but it’s quickly improving. It had available liquidity, including undrawn debt, of $86.7 million at the end of the quarter.

This is the type of software business where its subscription revenue has a high gross profit margin, meaning that new revenue is rapidly boosting the bottom line. The company is expecting to be free cash flow neutral by the fourth quarter of FY24, on a quarterly basis.

Temple & Webster Group Ltd (ASX: TPW)

The former COVID darling has fallen heavily. The Temple & Webster share price is down by around 25% over the past year alone.

I can understand why the market is worried in the short term – higher interest rates could hurt demand for furniture and homewares from the online retailer. Higher interest rates also may be a likely factor in pulling down the company’s valuation. As well, COVID lockdowns are over and shops are trading without restrictions so consumers may be less likely to buy items online compared to FY21.

However, I think the long term is promising for this ASX growth share.

The company’s active customer base is now substantially larger than it was pre-COVID — and those customers are coming back to Temple & Webster regularly. The company said in its FY23 half-year result presentation that 57% of orders are now from repeat customers. Temple & Webster said this will increase returns on marketing spending.

HY23 revenue per active customer increased 7%, driven by both average order value and repeat orders.

The business is seeing growth with both its trade and commercial division, as well as its home improvement products. Both of these market segments are worth billions, which is a larger opportunity for the business.

Management expects it will be able to achieve much higher profit margins in the coming years as it scales. The company has also noted Australia’s furniture and homewares market “significantly lags the online penetration of other countries such as the US and UK”, suggesting this can help the company’s revenue as more people shop online more often.

As this business grows revenue in future years, I think it can become much more profitable and this could excite investors.

The post 2 ASX growth shares I’d buy today before it’s too late appeared first on The Motley Fool Australia.

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• Here are the 10 most shorted ASX shares
• These are the 10 most shorted ASX shares this week
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• Supercharge your portfolio with these 3 ASX growth shares: brokers
• After steep falls, these ASX All Ords shares look dirt cheap to me

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended SiteMinder and Temple & Webster Group. The Motley Fool Australia has positions in and has recommended SiteMinder. The Motley Fool Australia has recommended Temple & Webster Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The team at Morgans regularly picks out its best ASX share ideas. These are the ASX stocks that the broker thinks offer the highest risk-adjusted returns over a 12-month timeframe and are supported by a higher-than-average level of confidence.

Among its best ideas for May are the two top ASX 200 stocks listed below. Here’s what the broker is saying about them:

Aristocrat Leisure Limited (ASX: ALL)

Morgans has this ASX 200 gaming technology company on its best ideas list in May. The broker believes Aristocrat is well-placed for long-term growth. It also highlights the company’s strong balance sheet, which provides it with opportunities to bolster its growth organically and inorganically. It said:

We have three key reasons for being positive on ALL. They are: (1) long-term organic growth potential. ALL is better capitalised than many of its competitors and has what we regard as a strong platform to continue investment in design and development in both its land-based gaming and digital businesses; (2) strong cash conversion and ROCE. ALL is a capital-light business despite its ongoing investment in Gaming Operations capex and working capital. It has a high level of cash conversion and ROCE; and (3) strong platform for investment. ALL has funding capacity for organic and inorganic investment in online RMG, even after the recent buyback. Its current available liquidity is $3.8bn.

Morgans has an add rating and $43.00 price target on Aristocrat’s shares.

CSL Limited (ASX: CSL)

This biotherapeutics company is on the broker’s best ideas list again in May. Morgans has labelled CSL as a key portfolio holding. This is due to its significantly improved outlook and attractive valuation. The broker explains:

A key portfolio holding and key sector pick, we believe CSL is poised to break-out this year, a COVID exit trade, offering double-digit recovery in earnings growth as plasma collections increase, new products get approved and influenza vaccine uptake increases around ongoing concerns about respiratory viruses, with shares offering good value trading around its long-term forward multiple of ~30x.

Morgans has an add rating and $337.92 price target on the ASX 200 stock.

The post Morgans names the best ASX 200 stocks to buy in May appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The National Australia Bank Ltd (ASX: NAB) share price will be one to watch closely today.

That’s because the banking giant has just released its eagerly anticipated half-year results.

Unfortunately, it appears as though the bank has fallen short of expectations, which could potentially put pressure on its shares.

NAB share price on watch following half-year results

• Statutory net profit of $3,967 million
• Cash earnings up 17% to $4,070 million
• Fully franked interim dividend up 13.7% to 83 cents per share
• Net interest margin (NIM) up 16 basis points to 1.77%

What happened during the first half?

For the six months ended 31 March, NAB reported a 19.3% increase in revenue or 16.6% excluding the impact of the Citi consumer business acquisition. Management advised that this reflects higher margins combined with stronger volumes and Markets & Treasury (M&T) income.

Speaking of margins, NAB reported a 16 basis points increase in its NIM to 1.77%. However, this is down slightly since the end of the first quarter. It is also short of Goldman Sachs’ estimate for a NIM of 1.83% for the half.

NAB advised that its NIM reflects higher earnings on deposits and capital as a result of the rising interest rate environment, partially offset by home lending competition and higher funding costs.

The bank’s expenses increased by 11.6% during the half. Though, excluding the impact of the Citi consumer business, expenses rose just 6.3%. Key drivers of this include salary increases, continued investment in technology capabilities, and compliance and remediation including activities. These impacts were partially offset by productivity benefits.

This ultimately led to NAB reporting a 17% increase in cash earnings to $4,070 million. While this is strong growth on paper, it falls short of the consensus estimate of $4,151 million.

Also falling a touch short was NAB’s fully franked interim dividend of 83 cents per share. Goldman Sachs had pencilled in an 84 cents per share dividend for the period.

Management commentary

NAB’s CEO, Ross McEwan, was pleased with the half. He said:

We have delivered a strong 1H23 financial performance with cash earnings up 17.0% compared with 1H22 and all businesses contributing to underlying profit growth of 25.5%. Our results have benefitted from the execution of our strategy over multiple years. This includes consistent investment in long term growth opportunities, while making choices for more targeted growth against the backdrop of a slowing economy and increasing competition.

The higher interest rate environment has also been an important near term driver of revenue this period. Staying safe and maintaining prudent balance sheet settings has been a key strategic focus which positions us well for the risks and volatility stemming from recent rapid monetary policy tightening.

Strong capital position

McEwan also revealed that NAB’s capital position remains strong. Which should be some comfort to investors following recent banking collapses. He adds:

Capital levels are above our targets, liquidity is strong, collective provision coverage remains well above pre COVID-19 levels and our FY23 term funding task is well advanced with $23 billion(1) raised in 1H23.

The CEO also commented on current trading conditions and how the cost of living crisis is impacting customers. He said:

The impact of higher living and interest costs on household spending and the broader economy is becoming more evident and we have a range of options available for customers needing support.

Finally, McEwan revealed that he is feeling positive about the company’s outlook. Especially with inflation showing signs of slowing. He concludes:

Early signs that inflation is moderating are encouraging and we remain optimistic about the outlook – our bank and most customers enter this period from a position of strength and we are well placed to continue managing our business for the long term. We remain focused on the disciplined execution of our strategy to drive sustainable growth in earnings and shareholder returns over time.

The NAB share price is down 12% over the last 12 months.

The post NAB share price on watch after half-year earnings fall short of expectations appeared first on The Motley Fool Australia.

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• 4 reasons to buy ASX 200 banks stocks right now
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• 5 things to watch on the ASX 200 on Thursday
• Buy NAB and this ASX dividend share: analysts
• What’s happening with ASX 200 banks today as First Republic teeters on the brink of collapse?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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One leading broker is warning investors that Mineral Resources Ltd (ASX: MIN) shares could be seriously overvalued at current levels and is urging them to sell.

Who is bearish on Mineral Resources shares?

The team at Goldman Sachs is behind the bearish call on this mining and mining services company’s shares.

According to a note from this morning, its analysts have downgraded Mineral Resources shares to a sell rating with a $53.00 price target.

Based on its current share price of $71.93, this implies potential downside of 26% for investors over the next 12 months.

It is also worth noting that Goldman isn’t expecting big dividend yields like some analysts are predicting. It only expects dividend yields of 2.1% in FY 2023 and just 0.4% in FY 2024.

This is due to its belief that the company’s free cash flow generation will be extremely challenging in the coming years.

What did the broker say?

There were three key reasons that Goldman Sachs downgraded Mineral Resources shares. It explains:

[We] downgrade MIN to Sell (from Neutral) based on: (1) Fully valued vs. peers and downside to revised PT (2) Lithium price expected to decline further from 2H23-25, (3) Positive medium term volume growth but negative FCF across FY24 & FY25 and stretched balance sheet.

In respect to its free cash flow, the broker adds:

Due to a step-up in growth capex at Ashburton and payments to Wodgina JV partner Albemarle, and our below consensus lithium price forecasts, we forecast negative FCF across FY23-25 and a FCF yield of -8%/-7%/-5% over these years.

All in all, the broker believes this makes Mineral Resources a resounding sell at current levels.

The post Guess who has just downgraded Mineral Resources shares to a sell rating appeared first on The Motley Fool Australia.

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• ASX lithium shares: Short-term pain for long-term gain?
• Top brokers name 3 ASX shares to buy next week
• Making it rain: Could this signal a boom for ASX 200 lithium stocks?
• Mineral Resources shares could have 40%+ upside and an 8% dividend yield
• Why A2 Milk, Mesoblast, Mineral Resources, and Synlait shares are sinking

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If the market volatility is getting you down, it might be a good idea to add some defensive ASX shares to your portfolio to shore things up.

But which shares fit the bill? Two defensive ASX shares that Goldman Sachs has just named as buys are listed below. Here’s what the broker is saying about them:

Endeavour Group Ltd (ASX: EDV)

The first defensive ASX shares that Goldman is recommending is drinks company, Endeavour. The broker is a fan of the company due to its industry-leading position, attractive valuation, and positive growth outlook.

In respect to the latter, earlier this week the broker said:

We tweak FY23-25e group sales by 0.6-0.7% respectively and EBIT by +1.2%-1.3% largely due to higher than expected Hotels sales despite slightly lower 2H23 margins. Our updated forecasts imply 4.4% sales CAGR and 8.3% EPS CAGR FY22-25e.

Goldman Sachs currently has a buy rating and $7.50 price target on Endeavour’s shares.

Woolworths Limited (ASX: WOW)

Another defensive ASX share that Goldman Sachs has named as a buy this week is Woolworths Group. It is of course the retail giant behind Woolworths supermarkets and Big W, among others.

Much like Endeavour, the broker is forecasting solid earnings growth from the company despite the tough economic environment. Earlier this week, in response to the company’s quarterly update, the broker commented:

We tweak our FY23-25e group sales by ~+1% and NPAT by 0.4%-1.1% respectively. This is due to slightly higher sales across all key business segments while our margin views remain intact. Our updated forecasts imply FY22-25e ~3.4% sales CAGR and ~9.6% CAGR for EBIT/NPAT respectively.

Goldman currently has a conviction buy rating and $42.80 price target on Woolworths shares.

The post Goldman Sachs names the high-quality defensive ASX shares to buy now appeared first on The Motley Fool Australia.

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• Here’s what brokers are saying about the Woolworths share price post-Q3 update
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• Volatility got you down? 3 steps to building a robust income from ASX 200 dividend shares
• Why Beach, Computershare, Endeavour, and Qantas shares are dropping today
• Woolworths or Coles shares: Which ASX grocery giant would I buy right now?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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While the market has been a little volatile recently, the All Ordinaries index (ASX: XAO) is still trading a world away from its 52-week low.

The same cannot be said for the ASX shares listed below which have just dropped to 52-week lows. Here’s why investors are selling off these shares:

Amcor (ASX: AMC)

The Amcor share price was hit hard on Wednesday and dropped to a 52-week low of $14.68. This has left the ASX share nursing a 12-month decline of 11%.

Investors have been selling this packaging company’s shares after its performance took a turn for the worse. This led to Amcor reporting a disappointing 34% decline in quarterly net income to US$177 million during the third-quarter.

In light of this poor form, management has downgraded its earnings guidance for the full year. It now expects to deliver earnings per share of between 72 to 74 US cents, which is down from its previous guidance of 77 to 81 US cents. Investors don’t appear to believe Amcor’s performance will improve quickly given the challenging economic environment.

Incitec Pivot Ltd (ASX: IPL)

The Incitec Pivot share price hit a 52-week low of $3.10 on Wednesday. This means the industrial chemicals company’s shares are now down over 21% since this time last year, as you can see below.

Its shares have come under pressure recently after announcing the sale of its American ammonia manufacturing plant in a $2.5 billion deal. Investors don’t appear overly convinced with the decision to offload the asset.

Outside this, concerns over market conditions in the agricultural sector could also be weighing on sentiment.

Syrah Resources Ltd (ASX: SYR)

The Syrah Resources share price sank to a 52-week low of 99 cents on Wednesday. This means this ASX graphite share is now down a whopping 46% over the last 12 months.

A good portion of this decline has come in recent sessions following the release of a bleak quarterly update. Syrah revealed that its unit costs were higher than the price it was receiving for its graphite. In light of this, the company has decided to reduce its production plans until prices recover.

Adding insult to injury for shareholders is news that it has raised $150 million through the issue of new convertible notes to AustralianSuper. This is to support it through this challenging period.

The post Why are these ASX shares at 52-week lows? appeared first on The Motley Fool Australia.

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• Why is ASX 200 mining stock Syrah Resources tumbling 11% today?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Amcor Plc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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A social media influencer has been sentenced to two-and-a-half years imprisonment for manipulation of the stock market.

The Melbourne County Court on Wednesday handed down the punishment to Gabriel Govinda, who is known online as Fibonarchery, for 23 charges of manipulation of ASX shares and 19 counts of illegal dissemination of information.

He had earlier pleaded guilty to those charges.

Govinda was found to have manipulated the prices of 20 different ASX shares through posts on the investor forum HotCopper — an activity colloquially known as “pump and dump”.

He thus becomes the first person to be sentenced for breaching s1041D of the Corporations Act.

“Mr Govinda used a social media forum as an integral part of his market manipulation,” said ASIC deputy chair Sarah Court.

“He promoted certain shares that he had an undisclosed interest in, and which he had manipulated, with a view to selling out at a higher price.”

ASIC officers found note detailing the crimes

The court heard that Govinda used 13 different share trading accounts under the names of relatives and friends to manipulate the stocks.

He was found to have acted illegally by trading between the accounts he controlled, which is a practice called “wash trading”, and putting in dummy bids to “falsely increase the perceived demand” for a stock.

Govinda then publicised this fake demand on HotCopper in order to inflate the share price so that he could then sell them for a profit.

During a search of his premises in 2015, Australian Securities and Investments Commission officers found a notepad that described his strategy.

“Buy big parcels of small cap cash backed resource shares at reasonable price, alert HC Daytraders to the action[,] sell to them at higher price at end of day,” read the note.

The document also said “sell to self to create illusion of volume” and “sell stock down to yourself then buy stock up to yourself”. 

“Buy cheap, make it expensive again, sell to others,” wrote Govinda.

Govinda’s infringements occurred before a March 2019 reform that saw the maximum jail time for market manipulation increased to 15 years.

The court, on the basis of a five-year recognisance, released Govinda immediately.

The post Finfluencer sentenced 2.5 years for ‘pump and dump’ of ASX shares appeared first on The Motley Fool Australia.

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More reading

• NAB share price on watch after half-year earnings fall short of expectations
• Guess who has just downgraded Mineral Resources shares to a sell rating
• Goldman Sachs names the high-quality defensive ASX shares to buy now
• Why are these ASX shares at 52-week lows?
• Guess which ASX medical share has exploded 275% in a month?

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Health Care Index (ASX: XHJ) has climbed 3% in the last month, but this ASX medical share has soared far higher.

The 4DMedical Ltd (ASX: 4DX) share price has rocketed 278% since market close on 3 April from 30 cents to $1.14.

So why has this ASX medical share had such a stellar run lately?

What’s happening?

4DMedical shares have been lifting amid a raft of positive announcements from the company.

In early April, 4DMedical advised it had signed its “first US hospital Software as a Service (SaaS) contract”.

Under a five-year contract with the University of Miami, 4DMedical will provide XV technology to enable the processing of patient data. XV technology enables physicians to detect the level of airflow in the lungs. 

4DMedical described the deal as a “significant milestone” for the company’s commercialisation strategy in the US.

Then on 13 April, 4DMedical provided further details on this sales contract. Under its terms, a minimum of $1 million to $1.5 million in fees is guaranteed to be paid to the company over a five-year term.

Meanwhile, on 26 April, 4DMedical updated the market with a quarterly report. Receipts from customers grew 67% to $1.2 million in the third quarter. The company reported a cash balance at 31 March of $36.8 million.

The company advised it is continuing to meet with US congress members on Capitol Hill to outline the company’s XV Technology and its potential to deliver on PACT Act healthcare for veterans. The former US Secretary for Veterans Affairs, Dr David Shulkin, has recently joined 4DMedical in an advisory role.

Finally, on 1 May, 4DMedical advised it had conducted its first commercial scanning within Veterans Health Administration. This took place at the Harry S. Truman Memorial Veterans Hospital.

Commenting on the news, 4DMedical CEO and founder Andreas Fouras said:

A vision to enable better care for Veterans is core to 4DMedical’s mission and culture. I am delighted to share the success of the first commercial scan at Harry S. Truman Memorial Veterans Hospital, completed by our team working alongside VA [Veterans Affairs] medical professionals.

Share price snapshot

The 4DMedical share price has soared 68% in the last year and 170% in the year to date.

This ASX medical share has a market capitalisation of about $334.7 million based on the latest share price.

The post Guess which ASX medical share has exploded 275% in a month? appeared first on The Motley Fool Australia.

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• 5 top ASX shares that would have more than doubled your money in 2023
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Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Fortescue Metals Group Ltd (ASX: FMG) share price was under pressure again on Wednesday.

The mining giant’s shares sank 4% to $19.99.

This means the Fortescue share price is now down over 14% from the 52-week high of $23.33 it reached in February.

Is the Fortescue share price cheap enough yet?

Unfortunately, the broker community continues to believe that the Fortescue share price is overvalued even after recent weakness.

In fact, I’m not aware of a single broker that has a buy rating on its shares right now.

The most positive broker is arguably Morgans, which has the equivalent of a sell rating and $18.20 price target on its shares. This implies potential downside of 9% from current levels.

Whereas analysts at Bell Potter, Goldman Sachs, and Morgan Stanley all see scope for the iron ore giant’s shares to crash over 20% from here. They each have sell ratings on its shares with price targets of $14.45, $15.80, and $14.10, respectively.

What is being said about the miner?

Last week, Goldman Sachs revealed why it is so bearish on the Fortescue share price. One reason is its valuation, the other is its dire free cash flow outlook.

In respect to its valuation, the broker highlights that its shares trade at a significant (undeserved) premium to peers. It explained:

[T]he stock is trading at a premium to RIO & BHP on our estimates; 1.4x NAV vs. BHP at c. 0.95x NAV and RIO at 0.9x NAV, c. 5.5x NTM EV/EBITDA (vs. BHP/RIO on c. 5x/3.5x), and FY24 FCF of c. 4% vs. BHP/RIO on c. 7/10%.

As for its free cash flow, the broker believes its material capital expenditure will mean its dividends come under pressure. It adds:

Uncertainties around Fortescue Future Industries (FFI) diversification and Pilbara decarbonisation and impact on dividend and balance sheet. The 2022 FMG site trip to the Pilbara highlighted ongoing elevated spend to maintain hematite group shipments at ~190Mtpa going forward. Combined with the ~US$7-8bn decarb program, we forecast FMG’s capex to increase from ~US$3.3bn in FY23 to US$3.8bn by FY25.

We continue to think FMG is at an inflection point on capital allocation, and to fund the ambitious strategy, we assume the company raises ~US$5.5bn of new debt, reduces the dividend payout ratio from the current ~65% in 1H FY23 to ~50% from FY24 onwards (bottom end of the 50-80% guidance range), and increases gross gearing to ~30% by FY26 (in-line with the company’s target of 30-40%).

The post Here’s what brokers are saying about the Fortescue share price in May appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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When a company’s senior management offloads a large chunk of shares, it almost always sparks some consternation amongst shareholders. And that’s exactly what has happened with ASX 200 lithium stock Sayona Mining Ltd (ASX: SYA) shares this week.

According to an ASX notice put out yesterday, Brett Lynch offloaded 4.578 million Sayona shares on 26 April in an on-market trade. This transaction was worth $892,509.

Not only is Lynch the managing director of Sayona Mining, but he is also the company’s CEO. So is this sale of shares by the CEO a red flag for Sayona investors today?

At first glance, it might appear that way. After all, the Sayona share price has had a rough few months. The company has fallen from the 30 cents per share levels that we saw back in January to the 20 cents a share the company is commanding today:

Many investors have the view that a CEO should be as closely aligned with the financial interest of shareholders as possible. So a CEO share sale is rarely greeted with enthusiasm by investors. Especially when the company’s valuation has been sliding recently.

Is the CEO’s sale a red flag for Sayona shares?

But remember, CEOs are bound by the same rules of prudent wealth management as the rest of us. Thus, it’s arguably difficult to fault a CEO for wanting to diversify their wealth and not hold all of their eggs in one basket.

A deeper look into the ASX notice gives us some valuable context as well.

Yes, it’s true that Lynch sold a large tranche of shares late last month. But the ASX notice also reveals that while Lynch offloaded more than 4.5 million shares on 26 April, he also acquired a far higher 30.62 million shares two days later on 28 April. Lynch didn’t purchase these shares. They were issued after he exercised 30.62 million listed options.

But the fact remains that Lynch sold 4.578 million Sayona shares, and then acquired 30.62 million. Hardly an absence of ‘skin in the game’.

After both of these transactions, Lynch still holds 164.28 million Sayona shares. Those would have a value of approximately $32.86 million, going off of today’s pricing.

So we can’t exactly fault Lynch for selling a small portion of his overall Sayona position. Maybe he had a tax bill to pay, maybe he wanted to buy a new house, or go on a holiday. All in all, this transaction doesn’t seem to indicate anything out of the ordinary – and certainly wouldn’t be construed as a red flag by too many investors.

 

The post The CEO has sold 4.5 million Sayona Mining shares in the past week. Is this a red flag? appeared first on The Motley Fool Australia.

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• Why did the Sayona Mining share price sink 5% in April?
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• Here are the 3 most heavily traded ASX 200 shares on Friday

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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