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Constellation Software Exec Sells $75 Million in Shares Ahead of Tax Hike

Quiver Editor

Constellation saw a surge in insider selling in June, driven by a senior executive’s move to unload C$102.6 million ($75 million) of shares ahead of a hike to the nation’s capital-gains tax. Mark Miller, chief operating officer of the Toronto-based firm, sold a combined 27,000 shares in three transactions in the middle of June, marking his first dispositions of Constellation stock since 2019. He had about 252,000 shares as of June 19, data compiled by Bloomberg show. Other executives sold as well, but in smaller amounts.

Miller’s sales came just before the Canadian government increased the capital gains tax inclusion rate. As of June 25, individuals must now pay income tax on two-thirds of any gains over C$250,000 in a year, up from the previous half. This policy change, announced in Finance Minister Chrystia Freeland's April budget, gave investors a narrow window to sell shares at the lower tax rate. The government expects this tax hike to generate C$6.9 billion this fiscal year, partly due to a rush of sales before the new rate took effect. The measure has sparked considerable debate, particularly within the tech sector.

Market Overview:
  • Constellation COO sells C$102.6 million in shares
  • Canadian capital gains tax rate increases as of June 25
  • Tech sector heavily impacted due to share-based compensation
Key Points:
  • Insider selling driven by upcoming tax changes
  • Finance Minister projects C$6.9 billion revenue from tax hike
  • Criticism from tech executives, including Shopify President
Looking Ahead:
  • Potential long-term impacts on tech sector valuations
  • Continued debate over the fairness and impact of the tax policy
  • Monitoring insider selling trends post-tax change

The tax hike has drawn criticism from the tech community, with Shopify (SHOP) President Harley Finkelstein labeling it “divisive and political” on social media. Finkelstein himself has been actively trading Shopify stock, selling more than a net 1,000 shares since the tax announcement. The tech sector, heavily reliant on share-based compensation, is expected to feel the brunt of this policy change. Christine Poole, CEO of GlobeInvest Capital Management, noted the significant impact on tech companies due to their extensive use of stock options, which have appreciated substantially in recent years.

Constellation’s stock has surged 20% this year, continuing its robust performance amidst these tax changes. Despite the controversy, the company remains a significant player in the Canadian tech landscape, navigating the complexities of evolving fiscal policies. As the effects of the tax increase unfold, stakeholders will be closely watching for further shifts in the market and corporate strategies to adapt to the new financial environment.

About the Author

David Love is an editor at Quiver Quantitative, with a focus on global markets and breaking news. Prior to joining Quiver, David was the CEO of Winter Haven Capital.

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