Director Trades: Buying your own shares instead of bog roll pays off – big time
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In a five-week period while Australians were hoarding toilet paper, 76 directors bought $100,000 more of shares in their own company.
Six months later since the COVID-induced market crash, the majority of those directors have come out on top – 70 per cent (53 of the 76) have seen a return on their investment.
Energy and resources stocks accounted for a significant proportion of the winners with retail following closely behind.
On a percentage basis the biggest return came from a pair of directors of South Africa-focused gas stock Kinetiko Energy (ASX:KKO). Agapitos Michael and Adam Sierakowski bought $100,000 and $148,714 respectively in the company’s rights issue back in March.
The company completed a high-resolution aeromagnetic survey on its flagship Amersfoort project after a lengthy hiatus of work on the project. Its contingent resource rose by 227 per cent from 1.5 trillion cubic feet to 4.9 trillion cubic feet.
The other director to net a gain of 200 per cent or better is Great Southern Mining’s (ASX:GSN) John Terpu off the back of exploration success at its Cox’s Find project.
Speaking of commodities, another March buyer was Peter O’Connor of uranium aspirant Boss Resources (ASX:BOE). After lagging for several years, uranium prices have risen in 2020.
While the company is waiting for the right prices to re-commence work at its Honeymoon project, it has approval to export more than 3mlb of uranium under the federal government’s Environment Protection (Impact of Proposals) Act.
It has recently managed to derive significant cost reductions by switching plans to an ion exchange process for mining that has lower energy costs.
Another notable energy player with directors on the link is Strike Energy (ASX:STX).
Last year, Strike and joint venture Warrego Energy (ASX:WGO) undertook a massively successful exploration campaign at West Eregulla – with the well springing forth 69 million standard cubic feet of gas.
By March, the stock had run out of puffbut it’s been regaining momentum in recent weeks as the next drilling campaign approaches.
Strike’s Neville Power bought $320,000 on the market and that is now worth $520,000 – 63 per cent higher.
While other directors didn’t net as significant gains, others recorded gains that may not have been predicted as COVID-19 first broke out.
Many retailers had to move to online only and even then had to battle weak consumer sentiment.
Ultimately, the boredom of consumers ended up being a windfall for some niche retailers such as Shaver Shop (ASX:SSG).
Craig Mathieson and Trent Peterson both made $100,000 purchases back in March and netted returns over 30 per cent. Their company has benefited from hair-care hungry consumers being forced to DIY.
Peterson also sits on the board of online homewares retailer Adairs (ASX:ADH). He and his colleague Michael Butler made over 90 per cent returns on their on market investments six months ago.
Footware store owner Accent Group (ASX:AX1) also has provided a return for directors that backed the company six months ago. Daniel Agosteinelli and Brett Blundy both made 50 per cent returns.