Wisetech's CEO sold $304 million of stock in FY24 – but in the most bullish way possible

WiseTech (ASX: WTC) Chief Executive Officer and Founder Richard White has sold $304 million worth of shares in FY24, the largest selldown in more than four years. While such a significant sale might typically raise concerns, a closer look reveals a strategic approach to calmly boost market liquidity.

The first transaction for FY24 was lodged on 18 April 2024, totalling $18.5 million or 207,570 shares. Interestingly, this was Mr White's first selldown since March 2023 and the largest on-market trade since December 2021.

But then another 'Change of Director's Interest Notice' appeared a week later, also amounting to $18.5 million or 208,239 shares.

And another ... and another.

An Orderly Selldown

In an interview with Livewire Markets, Mr White said his transactions were taking place daily. "Making a small daily trade, in a very orderly way and reporting it every week ... means that people can see that liquidity is coming to the market."

"The alternative would be to not sell the stock. We get a lot of complaints about the inability to get stock, in enough size, to make a substantial holding."

"I've been selling small amounts of stock, about the same percentage, every day, for probably the last three years (excluding blackout periods of course)," he said.

Despite being the largest ASX-listed tech stock with a market cap of around $40 billion, WiseTech faces liquidity issues due to its high share price. To illustrate, a snapshot of the stock's sell-side at 3:30 pm AEST on a Wednesday showed that buying just $34,310 worth of shares would wipe out multiple price levels and push the share price higher.

• Current price $117.47

• $117.48 – 5 shares

• $117.49 – 22 shares

• $117.50 – 123 shares

• $117.51 – 21 shares

• $117.53 – 32 shares

• $117.55 – 22 shares

• $117.57 – 21 shares

• $117.59 – 23 shares

• $117.61 – 23 shares

When asked about a potential share split to boost liquidity, Mr. White acknowledged it as a possibility but not a current priority: "It’s not particularly value accretive but, as I understand it, it may make the stock attractive for some retail investors."

"Something to think about when we are not so busy growing the company."

Avoiding block trades

Another alternative is a block trade – a large, privately negotiated sale between institutional investors. The buyer typically receives the shares at a discount to compensate for the large transfer.

Mr White said he has been approached dozens of times by various investor groups asking if he would sell them a block. "I'm unwilling to do that because I want the market to be very calm. A block is very noisy and comes at a big discount and requires a lot of effort to do."

The market can interpret a block trade in many different ways. Here are two polarising trades that have taken place in the past year.

• Fortescue (ASX: FMG): On 17 June, a major shareholder sold $1.1 billion worth of shares at a fixed 6% discount or $21.60 per share. The next day, Fortescue shares opened 2.7% lower at $22.35 but closed 5.2% lower to $21.79.

• Pro Medicus (ASX: PME): Co-founders Dr Sam Hupert and Anthony Hall sold 1 million PME shares each on 21 November 2023. The sale was conducted at a rare zero discount, indicating that the buyer was happy to take on the risk and noise of such a large transaction.

• In summary – The vast majority of block trades are conducted at a discount and tend to place downward pressure on the stock.

"I have a strong preference for the “trickle out” style we are doing, and it is an excellent way of letting the market see a calm and logical diversification and it gives predictable but gentle increases in liquidity," White said.

Ownership down, value up

While Mr. White's ownership percentage has decreased from 51% in April 2016 to 35% in June 2024, the value of his stake has grown dramatically.

• WiseTech's share price has risen from $3.35 in April 2016 to around $120 (a 3,300% increase)

• The dollar value of his shareholding is up 65% compared to FY23 levels

• His stake's value has increased approximately 28-fold since the 2016 IPO

Source: WiseTech