Undoubtedly the biggest news on the NZX this week came from Pushpay. Pushpay are a company that we have spoken about in detail on the podcast in the past. In Episode 22 I had founder and former CEO Chris Heaslip. This blog post is also about Chris Heaslip, he resigned from his position as CEO from the company from May 31st of this year. During the week the company announced that he would be selling 12.24 million of his shares, representing 4.45% of the shares outstanding and is 41.2% of the shares he owns. So he will be left with an ownership of about 6% in the company.
So based off a market cap of around $1 billion he will be pocketing around NZ$45 million minus all of the fees he will probably have to pay. Which is not a bad days work, in anyone’s language. Now, of course, it is more than a days work. Chris was one of the founders of Pushpay and being the former CEO was obviously instrumental in getting it to where it is today. So he is essentially cashing in the reward for taking the risk, being entrepreneurial and setting up a successful company.
There are two ways to look at this. One way to look at it is to take the view that insider selling is always a bad thing and at least some people in the market felt this way as I note that the stock was down after the trading halt. The view here is that he must not have confidence in the company so he is selling his shares. And that view from time to time does make sense. And there are some examples in the past of companies where key people have sold out right before they have gone down the drain. So yes, I guess you cannot ignore this as a possibility. And I guess as a shareholder you would rather see him hold all his stock. There is obviously something to admire about founders that remain fully invested. But that is the exception rather than the rule.
Think about what you would do in his situation? If your stock was worth a hundred million, would you sell? Can you blame him for taking $45 million out, imagine that payday, it would have to be a good day in the Heaslip household. You are setting your grandkids and their grandkids up for life. Its a no brainer. I’d almost certainly do the same as it would be burning a pretty big hole in my pocket. As a comparison, think of all the property owners in Auckland who have suddenly found themselves with property that they can sell for a million dollars, loads have all moved to Tauranga and bought a house for half as much. They are stoked with the extra $500k cash. So yeah, when you put it in that context, you can understand selling out.
To summarise, I cannot say definitively that it is a bad thing or a good thing that he is selling down. But I would say that on the balance of probability it is neutral is a non-event. I do not think that the success of failure of Pushpay as a company will hinge on what Chris Heaslip does with his shares. In my opinion, you shouldn’t be selling or buying the stock because of this news.