Late last week TPG’s founder, David Teoh, sold a sizeable chunk of shares (c$300m), at a modest discount to market price (~$6.30, from around $6.50-$6.60).

However, any time a founder starts a material sell down, questions naturally arise about how the underlying business is tracking.

Has the founder lost faith? Are they unhappy with the strategic direction? Do they know something outsiders (e.g. us) don’t?

As such, the market sent TPG shares down close to $6.00 on the back of the new news.

We can’t know if David Teoh thinks those things. That’s the first point. Everything is just educated guessing about what he truly thinks.

When he stepped down from TPG, post the Vodafone merger, the same sorts of questions arose. The share price de-rated by ~20%, and we bought a couple of percent (of the portfolio) on the back of it.

We sold around half of the added weight, in the low $7.00s. That’s nice trading, at the margin, but hardly meaningful to the total portfolio return.

So, how much will the market send TPG shares down, following this parcel of shares sale? We don’t know. Further, based on the last time, but we can’t be sure.

There’s an old saying in funds management; people sell for many reasons, but buy for only one.

Funnily enough, that’s not quite true. Management will sometimes buy small amounts of stock to signal to the market that things are tracking well, even if they don’t quite truly believe it themselves. But it is a useful reminder that Mr. Teoh could well simply be doing other things with his life.

Founders, upon ceding control of their company, often exit. They’ve usually got large holdings, and it is an overhang on the stock until that process resolves itself.

So what have we achieved here with our note? Not much. We’ve made the point that there’s nothing overtly unusual about David’s actions, and that we also have no way of really knowing what his personal viewpoint is.

Thus we continue to focus on the fundamentals, and the basis of our thesis, namely that the teleco’s have a strong industry tailwind behind them (5G, ARPU growth, M&A consolidation leading to increased market power, less discounting, and better industry returns) alongside idiosyncratic drivers like revenue and opex synergies for TPG following the merger, and the opportunity to gain market share from the incumbent (TLS).

To that end, we note the recent positive announcements from TPG, regarding new contract wins (below) and last weeks world record setting long distance 5G video and voice call.

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