Insiders and Outsiders

There\’s a great deal of truth in this:

Chief executive Mark Clare was so thrilled with Barratt\’s prospects that in February 2007 he bought rival Wilson Bowden for £2.2bn. At the time, Clare had been in the job only a few months and had little experience of housebuilding. By contrast, David Wilson, who founded Wilson Bowden, had spent a lifetime in the industry. The timing of his exit, even though he took only about half his payment in cash, looks exquisite.

Equally clever was the decision of Jon Hunt, the founder of Foxtons, to sell his posh estate agency last July, the peak of the market, for £390m. Had Hunt waited 12 months, he would not have got even a quarter of that price. In fact, as the housing market crumbles, many agencies are simply unsaleable.

As is often the case, when those who know the business backwards, especially if they are the founders, reckon it\’s to time to sell, the rest of us should take note. The departure of Wilson and Hunt signalled the coming of winter.

Markets, by their very definition, are made up of people who place different values on the same things. But when you see the industry insiders selling off to those who know a little less, that\’s as useful a sign of the peak as you\’re going to get.

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