ASX Director Trades: Who is buying in BIG and selling down even BIGGER?

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• It’s been a big week of ASX director trades with large buys and sells  as reporting season comes to end
• Lithium producer Allkem sees one of its directors sell down more than $20 million worth of stock
• Leaders in blood products giant CSL sell down holdings to pay the taxman and for philanthropy

Director trades are often considered a good indicator of a company’s future prospects. Our fortnightly ASX Director Trades column informs you who is buying in and who is selling down.

Often referred to as insider buying or selling, directors are legally permitted to buy and sell shares of the company and any subsidiaries. However, these transactions must be properly registered and divulged.

Insider buying or selling is not to be confused with insider trading, which is buying shares based on non-public information, a big no-no and illegal.

We troll through the ASX company announcements looking at director trades of interest over the past fortnight. It’s usually the big ones that stand out or those coinciding with company news.

Directors may get shares as part of employee incentive schemes, share purchase plans, rights issues, participate in dividend reinvestment plans or purchase on-market. It’s the on-market trades we think are worth noting, where directors directly or indirectly through entities they are associated either put up cash or cash in a stake.

When a director buys shares on-market, it can signify confidence the share price will rise in the future and if multiple directors are buying, especially at larger amounts, that is even more of an indication. Of course, it’s not a sure win that the share price will rise, so it’s always worth further research on a company.

Directors will often buy company shares after a sharp price decrease. Directors may think the stock has been oversold and represents good value, sometimes they want to show confidence in their company’s prospects, other times they’ve just got another good reason to buy or sell a stock which will be divulged, like paying the good ol’ taxman.

Weekly overview

The ASX has been volatile with economic uncertainty impacting markets globally and abroad. Last week the benchmark ASX 200 index finished down almost 4%, while it has also been a sluggish start to the week on the back of the RBA lifting interest rates 0.25% on Tuesday to 2.35%, the highest since December 2014.

The RBA’s rate hikes follow US Federal Reserve boss Jerome Powell declaring his intention to continuing fighting against inflation at the Fed’s annual policy forum in Jackson Hole, Wyoming.

Director Trades is a Fortnightly Stockhead column. But going through the data, there continues to be significant numbers of ASX director trades with big buys and sells as reporting season comes to an end, warranting an extra column this week.

ASX director trades – recent large buys

Aussie Broadband (ASX:ABB) directors have been bullish on the stock. Several directors have increased their stakes in the company on market coinciding with issuance of FY23 NED rights and options under long-term incentive plans (LTIP).  Standing out and worth mentioning with large on market buys was executive director Michael Omeros and co-founder and managing director Phillip Britt.

Britt purchased his latest shares indirectly under Digital Interworks Pty Ltd. According to the ASX announcement Britt holds more than 20% of the voting power in Digital Interworks, which now has 16,253,059 ordinary shares in ABB.

Kogan.com (ASX:KGN) chief financial, chief operating officer and executive director David Shafer has confidence in the e-commerce platform, increasing his stake with a buy worth more than $500k. He now owns 5,225,642 ordinary shares in the name of Shafer Corporation Pty Ltd ATF the Shafer Family Trust  and 2,400,000 options in the name of David Shafer.

The Kogan share price has fallen ~60% year to date.

The purchase of shares by Good Drinks Australia (ASX:GDA)  non-executive chairman Ian Olson and non-executive director Graeme Wood were also worth noting. “The board, senior management team and their families alongside existing shareholders have recently acquired a total of 4.3m shares through an on-market trade at $0.75 per share (total value $3.23m),” the company said in an ASX announcement.

“This significant level of financial commitment by the board and management team reflects a shared belief in the attractiveness of the Company’s valuation at these prices,” Olson said.

ASX director trades – recent large sells

While there were weeks during the August reporting season where there were no director sells at all, they are starting to make a big return, Non-executive director and chair of the sustainability committee of Allkem (ASX:AKE) Richard Seville has sold more than $20 million worth of stock indirectly.

Seville still holds more than 3 million ordinary shares in AKE, which recently announced  record financial results in the first year of its highly successful merger of Orcobre and Galaxy Resources, including group revenue for the period increasing over 800% to US$770 million, compared to the prior year.

Independent non-executive chairman and nomination and governance committee chairman Martin Rowley has also sound down more than $1 million worth of stock but still holds more than ~2.75 million shares.

The AKE share price has risen more than ~55% year to date.

Megaport CEO sells ~$5 million worth of shares to pay taxman

Network as a service (NaaS) Megaport CEO (ASX:MP1) CEO Vincent English has sold down almost $5 million worth of stock to meet tax obligations according to an ASX announcement.

“Pursuant to Megaport’s employee share option plan, Mr English had previously been granted options over fully paid ordinary shares in Megaport, exercisable at various prices,” the announcement said.

“In 2020 and 2021, Mr English exercised these options and sold shares to cover the exercise price and to partly meet expected taxation payment liabilities. To meet remaining taxation payment liabilities arising from these transactions, Mr English sold 700,205 fully paid ordinary shares in Megaport between 29 August 2022 and 1 September 2022.

“Mr English and his associates now hold 907,426 fully paid ordinary shares in Megaport.”

The MP1 share price has fallen ~64% year to date.

Big sells in CSL for philanthropy and tax obligations

Plasma products giant CSL (ASX:CSL)  chairman and non-executive director Dr Brian McNamee AO has sold down more than $4.8 million worth of stock, representing 10% of his holding. McNamee was the CEO and managing director of CSL from 1990 until 2013.

According to an ASX announcement the proceeds of the sale will be used to meet personal and philanthropic obligations.

“Following this transaction, Dr McNamee continues to hold a significant interest in the Company’s securities, comprising 146,276 ordinary shares and he continues to be one of CSL’s largest private shareholders,” the announcement said.

CSL also announced CEO Paul Perreault had also sold ~$4.7 million worth shares earned through long-term Incentive (LTI) awards that have previously vested from grants made under CSL’s remuneration plan.

“The sale was made to meet tax withholding obligations, for portfolio diversification purposes and for philanthropic purposes,” the announcement said.

Following this transaction Perreault continues to hold 166,221 ordinary shares and 160 American Depository Receipts.

“This represents a shareholding of 18 times Mr Perreault’s base salary and is well above CSL’s minimum guideline for its CEO which is to hold shares worth three times salary – a reflection of the company’s remuneration model that links executive pay to the continued achievement of CSL’s long-term strategy, ” the announcement said.

Furthermore, CSL announced non-independent executive director Professor Andrew Cuthbertson AO has indirectly sold down ~$6.7 million worth of CSL ordinary shares in an on market  trade.

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