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JSE directors on a buying spree

Exceeds sellers by a factor of three, suggesting growing confidence in key areas of the market.

JSE directors went on a R2.3 billion sharebuying spree over the last three months. That’s more than three times the R772 million-worth of shares sold by directors over the same period.

So what accounts for the sudden enthusiasm for share buying (bearing in mind that public investors take comfort in directors buying their own shares)?

Several of the shares involved have dipped in price, presenting a good opportunity for buying.

Bear in mind that many of these transactions would involve the exercise of options, and are not necessarily cash transactions. The data is from Share Magic, part of Profile Media, which redistributes data issued by from Stock Exchange News Service (Sens). Any reference to buying below could be the exercise of options, and in some cases the directors are indirect beneficiaries. The total value of purchases and sales are based on weighted average calculations, as shares purchased or options exercised would be done over a period of time.

Property company Polksprop, with 10 office and 11 retail projects in Poland, is a case in point. The shares were at R23 in October last year and are now down to about R18. Two of the directors, Marc Wainer and Andrew König, no doubt saw this as a time to stock or exercise options, purchasing R160 million- and R76 million-worth of the stocks respectively.

By far the biggest “buyer” in the last quarter was Paul Harris of Rand Merchant Investment Holdings, who is reported to have bought close to R1 billion of the company’s shares (though he is listed as an indirect beneficiary). This may be a collar transaction, which is the buying of both a put and call option, which would limit both the downside, and the upside, though the Sens announcement is not clear on this. The RMI share price dropped from R43 to R38 in recent weeks, and has since rebounded to R42.

Real Estate Investment Trust (Reit) Redefine was another big buyer of its own shares, to the tune of R39 million. Redefine is the largest single shareholder in Polksprop. Clearly, both groups have great confidence in the future of the sector.

Equites is another Reit where the directors are backing themselves. An associate of the company is listed as having bought R359 million worth of the shares in the last three months. The share price is up 30% over the last year to more than R16 this week.

Of the directors who are named as buyers of their own company’s shares, Nic Holland, CEO at Gold Fields, clearly believes the company is a steal at its currently low price of around R40. It touched R91 a share in August last year, and is highly leveraged to the rand and the gold price. Holland picked up R13.5 million-worth of Gold Fields shares in the last three months.

Stuart Bird, CEO of Mr Price, also took a R16 million punt on his company’s shares as it fell to a recent low of R130 in November last year, though has since climbed to about R170.

Horse racing and betting group Phumelela features prominently on the buying list of directors, accounting for no less than three of the top 20 purchases over the last quarter. The share price spiked to R26 late last year, but has since come off to around R20.

Naspers-N is down about 17% from its September 2016 highs, and appears on both the buy and sell columns of directors’ dealings. Non-executive director Stephan Pacak bought more than R10 million of the shares in the last quarter and sold R55 million over the same period, while executive director Mark Sorour offloaded a whopping R89 million of the shares – the biggest sale of the quarter.

There’s no question that lightening up on Bidvest after its doubling in price over the last year made sense for executive director Lindsay Ralphs, who pocketed more than R17 million for his efforts.

The same logic applies to financial services group Transcap, whose price trebled since 2015. A director of a subsidiary is reported to have sold close to R7 million of the shares.

Wayne Hook of Spar took advantage of the surge in share price since 2015 to cash up R7 million worth of his shares.

Perhaps the most interesting aspect of this analysis is the fact that directors are such strong buyers in their own companies, with more than 650 purchases being reported over the quarter, and only 220 sales. Perhaps that is a vote of confidence in the JSE and the investors should take note.

Top 20 buyers

Name of director

Value

Sector

RMIH

Harris, Paul K

468,000,000.00

Equity Investment Instruments

RMIH

Harris, Paul K

458,640,000.00

Equity Investment Instruments

EQUITES

Associate

359,703,528.80

Real Estate Investment Trusts

POLSKPROP

Wainer, Marc

160,018,581.20

Real Estate Investment & Services

EOH

Mackay, Danny

120,146,159.00

Software & Computer Services

PERGRIN

Associate

87,000,000.00

Financial Services

POLSKPROP

Konig, Andrew

76,008,819.85

Real Estate Investment & Services

REDEFINE

Associate

39,439,872.46

Real Estate Investment Trusts

PHUMELELA

Jooste, Markus J

30,224,592.00

Travel & Leisure

DIPULA B

Associate

25,927,571.39

Real Estate Investment Trusts

PHUMELELA

Associate

16,850,144.84

Travel & Leisure

PHUMELELA

Associate

16,850,144.84

Travel & Leisure

MRPRICE

Bird, Stuart

16,101,145.00

General Retailers

EOH

King, John W

15,260,000.00

Software & Computer Services

CONDUIT

Moodley, Tyrone

14,974,564.15

Nonlife Insurance

RCL

Director of a Subsidiary

14,570,734.08

Food Producers

GFIELDS

Holland, Nicholas J

13,756,207.32

Mining

CONDUIT

Riskowitz, Sean

13,665,475.25

Nonlife Insurance

FORTRESSB

Brown, Steven

11,750,000.00

Real Estate Investment Trusts

NASPERS-N

Pacak, Stephan J Z

10,500,000.00

Media

 

Top 20 sellers

Name of director

Value

Sector

NASPERS-N

Sorour, Mark

89 400 120.02

Media

BIDVEST

Ralphs, Lindsay Peter

17 393 874.39

General Industrials

NASPERS-N

Pacak, Stephan J Z

55 388 940.70

Media

DISCOVERY

Maphai, Thabane Vincent

8 036 749.77

Life Insurance

MONTAUK

Jacobson, Michael

7 995 000.00

Oil & Gas Producers

PRESCIENT

Director of a Subsidiary

7 920 000.00

Financial Services

FORTRESSA

Associate

7 666 511.07

Real Estate Investment Trusts

EQUITES

Associate

7 586 310.75

Real Estate Investment Trusts

CALGRO

Director of a Subsidiary

7 556 250.00

Construction & Materials

SIBANYE

Keyter, Charl

7 396 422.99

Mining

FORTRESSA

Associate

7 175 474.11

Real Estate Investment Trusts

SPAR

Hook, Wayne A

7 126 000.00

Food & Drug Retailers

PSG KST

Associate

7 005 817.50

Financial Services

TRANSCAP

Director of a Subsidiary

6 900 408.49

Financial Services

A-V-I

Cressey, Owen P

6 594 774.45

Food Producers

DISCOVERY

Mayers, H P

5 641 725.02

Life Insurance

BARWORLD

Wilson, Donald G

5 584 036.80

General Industrials

NAMPAK

Director of a Subsidiary

5 506 405.42

General Industrials

PNR FOODS

Roux, P M

5 098 053.90

Food Producers

SPAR

Godfrey, M W

5 093 073.00

Food & Drug Retailers

Source: Share Magic

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Sorry for nitpicking, however, it seems these are “JSE-listed companies’ directors” and not “JSE directors”.

Is there an editor at Moneyweb? This article is so inaccurate not even the New Age would publish it. I checked only two of the dealings and both were inaccurate. Paul Harris did not buy R1bn of shares (bought a put and sold a call). Mr Price’s Bird had options which vested.

What a disaster of an article! Quite embarrassing actually.

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