Based on Hargreaves Lansdown, the three hottest shares on its platform final week had been FTSE 100 firms Phoenix Group, Authorized & Basic, and BP.

The 2 insurers represented 1.65% and 1.53% of all trades final week, whereas BP represented 1.39%, simply tipping Rolls-Royce at 1.25%.

Nonetheless, as a substitute of offering a run down as to all of the shares buyers purchased and bought, I believed it might be extra helpful to take a better look as to why these two insurers Phoenix Group and Authorized & Basic, topped the listing.

Not universally cherished

Let’s begin by recognising that opinion amongst analysts is blended on these shares.

Final week, Goldman Sachs reiterated its present rankings for a number of key gamers within the UK-listed insurance coverage sector. This included a ‘neutral’ score for Authorized & Basic, suggesting its present market price possible displays its truthful worth and a ‘sell’ score for Phoenix.

Nonetheless, the opinion of all analysts masking these shares is broadly constructive. Each firms have ‘outperform’ rankings.

At the moment, Phoenix Group is buying and selling round 9.1% under its common share price goal — that’s the consensus view of all analysts and never simply Goldman. In the meantime, Authorized & Basic trades round 16% under its share price goal.

Making headlines

Final week, Phoenix reported a 15% improve in adjusted working earnings for the primary half of 2024, reaching £360m, and determined to retain its SunLife division as a substitute of promoting it.

The corporate additionally reiterated its medium-term targets, aiming for £1.4bn-£1.5bn in money technology by 2024 and £900m in adjusted working revenue by 2026. 

At first, the market didn’t seem like wowed by the earnings report, or maybe the choice to not promote SunLife. Nonetheless, buyers adopted a net-buying place towards the top of the week with the inventory lifting.

In the meantime, Authorized & Basic introduced the sale of its UK home builder CALA Group for £1.35bn to Sixth Avenue Companions and Patron Capital. Authorized & Basic desires to simplify its portfolio and deal with core companies.

It’ll obtain £1.16bn in money proceeds, with £500m paid at closing and the remainder over 5 years.

Retail buyers search alternative?

A lot of you’ll have already famous that each Phoenix Group and Authorized & Basic inventory fell final week. And that contrasts with the concept these had been essentially the most purchased shares by Hargreaves Lansdown buyers. In spite of everything, the inventory market is all about provide and demand.

As such, we are able to assume that institutional buyers, together with credit score unions, banks, different insurance coverage firms and enormous funds comparable to a mutual or hedge fund, and enterprise capital funds, might have bought shares in these firms. And as these institutional buyers bought their holdings, retailer buyers swooped on the chance.

And whereas some buyers would possibly discover these insurance coverage firms to be boring, noting mature markets and sluggish development expectations, others will probably be very happy to snap up these large dividend payers. Phoenix presently provides a 9.6% yield and Authorized & Basic, 9.2%.

These are index-topping dividends and these insurers have the money flows to make it doable.