Transaction Capital CEO sold R51 million in shares before disaster struck

Transaction Capital CEO David Hurwitz sold a large chunk of his stake in the company less than three months before it released poor results resulting in the share price plummeting 40%.

On 19 December 2022, Transaction Capital announced that the Dovie Trust had disposed of securities held in the company.

Dovie Trust is the family trust of David Hurwitz, of which he is a discretionary beneficiary.

“These securities were pledged as security for portfolio debt from an institutional lender,” Transaction Capital said.

“A portion of the debt has fallen due, and the Dovie Trust has elected to sell the securities as part of its portfolio rebalancing and debt reduction goals.”

All disposals of Transaction Capital securities were executed on market by a broker, with prior clearance, on behalf of Hurwitz.

The below table details the number of shares disposed of and proceeds received by Hurwitz.

Poor trading statement

This week, Transaction Capital released a trading statement which sent the share price plummeting by 40%.

Core earnings per share from continuing operations for the last six months are expected to decrease between 20% and 50%.

One of the underperformers was WeBuyCars, which experienced margin pressure in the first quarter resulting in a big earnings decline.

The company tried to downplay it, saying it should be considered against an extremely high comparator base in the first half of the 2022 financial year.

The further bad news was that Transaction Capital believes that the cyclical headwinds facing SA Taxi’s business model have become structural.

“The business is unlikely to recover to pre-Covid levels in the short to medium term. Management is proactively addressing this through an aggressive restructuring,” it said.

Investors did not like what they heard and dumped the company’s stock after the market opened on Tuesday, 14 March 2023.

By 15:00, the Transaction Capital share price plummeted by 40% – the biggest one-day decline the company has ever experienced.

Transaction Capital’s results for the half year ending 31 March 2022 will be released on SENS on Wednesday, 10 May 2022.