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Keeping an eye on what UK investors are buying and selling can be interesting and sometimes useful. Over the past week, investors have been selling three prominent blue-chip FTSE 100 stocks on Hargreaves Lansdown’s platform.
Here, I’ll look at why, and see if any tickle my fancy.
Rolls-Royce
Let’s start with the most-sold Footsie share, based on the number of deals placed by Hargreaves Lansdown clients. This was engine maker Rolls-Royce (LSE: RR).
At first glance, this isn’t very surprising. The stock flew above 900p in June, a new all-time high. This came after the company beat off competition to build and deploy small modular reactors (SMRs) in the UK, sometime in the mid-2030s.
The stock has nearly doubled over the past 12 months. Therefore, investors appear to have been taking some profits off the table.
Or perhaps some were alarmed at the sudden outbreak of war between Israel and Iran last week. This is forcing airlines to divert routes or cancel flights. Long-haul travel demand is highly sensitive to such external shocks (wars, terrorism, volcano eruptions, pandemics, etc).
However, such risks are arguably not reflected in the stock, which is trading at 37 times this year’s forecast earnings. A premium valuation.
That said, the company has been firing on all cylinders recently, with its three core divisions (civil aerospace, defence, and power systems) performing strongly. Each should enjoy steady long-term growth.
I invested in Rolls-Royce back in 2023, and I’m happy with that position. I won’t be joining Hargreaves Lansdown’s customers by selling.
If the stock dips, I’ll consider buying more shares. But we’re nowhere near that yet.
BP
The second most-sold share was BP (LSE: BP). I find this a little more surprising, as the Israel-Iran conflict has sent oil prices up. The BP share price has jumped 8.7% since the start of June.
Phil Flynn, senior analyst with the Price Futures Group, told Reuters: “This [Iran war] is not a one-and-done; it’s probably much more similar to Russia and Ukraine.”
If so, the current bump in oil price could be just the start.
One risk here though is BP’s balance sheet, with net debt near $27bn at the end of the first quarter. Servicing this means less cash for share buybacks, dividends, and growth initiatives.
I don’t personally invest in oil stocks, as they’re far too cyclical for my liking. But if I did, I might be tempted to consider BP today. It’s cheap as chips, while offering an attractive 6.3% trailing dividend yield.
IAG
The final stock being sold last week was International Consolidated Airlines Group (LSE: IAG). The British Airways owner has some similarities with Rolls-Royce, in that its shares have nearly doubled over 12 months and events in the Middle East present challenges.
Flight detours increase flight times and burn more fuel, potentially squeezing profit margins. Also, the tragic crash in India won’t have helped passenger confidence.
Stepping back then, I can see why investors have been pressing the sell button. IAG stock is down 8% in a week.
Without meaning to sound like a broken record, I don’t tend to invest in airline stocks, for the same reason as above. But the stock is trading at low multiples, suggesting it could be worth considering, especially if it keeps falling.
