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Director Trades
Director trades are often considered a good indicator of a company’s future prospects. Our fortnightly 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.
As we head into August, in a volatile year for global equity markets July didn’t end on a bad note for the ASX. The traditional July rally kicked in and overall, the S&P ASX 200 (XJO) was up 6.20%, with many sectors well and truly in the green.
This week has seen a seasaw start August, with the RBA yet again hiking rates on Tuesday by 50 basis points to contend with the highest rate of inflation in decades.
The cash rate is now 1.85% after consumer price index (CPI) rose by 1.8% in the June quarter, with the annual inflation rate increasing to 6.1%.
While new options have been issued, options exercised along and transactions relating to performance rights there’s been few director on-market buys and literally no sells in the past fortnight.
Instead the fortnight has been dominated by quarterlies season, where companies have had to report results for the prior quarter which could account for the low volume of on-market director trades, especially sells.
Mereweather Capital Inception Fund portfolio manager Luke Winchester told Stockhead most director sells are genuine and tied to real world outcomes like selling for tax to purchase property or diversify assets it is very important to maintain positive optics for the market.
“It is not a good look to be selling prior to trading updates or reports, and many companies have blackout windows that prevent it regardless, so most directors will wait until after results to avoid any regulatory scrutiny and avoid negative speculation by the market,” he said.
“Price is also a consideration, with the market getting hit so heavily over the last few months many directors would be unwilling to sell into depressed share prices.
“Ideally if you are director who needs to sell for a bit of cash you would wait for a good report and sell on the back of a higher share price and I’d think the market would stay relatively happy with that.”
| Code | Company | Director | Direct or Indirect | Date | Volume | $ | Nature of change |
|---|---|---|---|---|---|---|---|
| APE | Eagers Automotive | Nicholas George Politis | Direct & Indirect | Jul 19, 20, 21, 25,26,27, 29 & Aug 1 | 80,000 | $976,477.00 | On-market |
| TEK | Thorney Technologies | Alex Waislitz | Indirect | July 19, 20,22,25,26 | 760,000 | $172,800.00 | On-market |
| KAI | Kairos Minerals | Phillip Coulson | Indirect | July 14-21 | 4,861,145 | $110,481.44 | On-market |
| BKI | BKI Investment Company Limited | Ian Thomas Huntley | Direct & Indirect | Jul-27 | 58,800 | $99,666.00 | On-market |
Car dealer Eagers Automotive (ASX:APE) has seen its largest shareholder, regular rich-lister and director Nicholas Politis continue to increase his holding in a series of 10,000 lot purchases.
On July 15 Eagers shareholders approved the acquisition of WFM’s Group ACT dealerships and associated properties, which Politis majority owns and controls.
Politis has been the largest shareholder in Eagers since 2000 and now owns 70,365,321 million shares. He is also chairman of the Sydney Roosters in the National Rugby League competition.
The Eagers share price has rise more than 27% in the past month to $12.53.
Kairos Minerals (ASX:KAI) non-executive director Phillip Coulson has increased his holding in the lithium explorer.
Kairos recently made a lucky discovery of spodumene pegmatite during routine earthmoving activities next to the flagship Mt York gold deposit, less than 4km from Pilbara Minerals (ASX:PLS) Pilgangoora Lithium-Tantalum Mine.
Five samples from ‘Lucky Sump’ were analysed and found to contain spodumene, a highly sought-after critical raw material used in the manufacture of rechargeable Electric Vehicle (EV) batteries.
Coulson now holds 54,861,145 fully paid ordinary shares in Kairos and has more than 14 million options. The company’s share price has risen 35% in the past month to 2.7 cents.
Founder and chairman of listed investment group Thorney Technologies (ASX:TEK) Alex Waislitz has topped up his holdings.
TEK enjoyed a July rally and has seen its share price up more than 26% to 26 cents.
In an interview with The Australian recently, the billionaire investor was optimistic, saying he believes equity markets are nearing the bottom with early signs of easing inflationary pressures.
We’ll have to see what happens in the next fortnight.
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