Buying season continues for company Directors

A fortnight ago, we looked at an emerging pattern of ASX Directors buying shares in their own companies and very few selling.

When that article was written on March 19, there had been approximately 420 ‘buys’ and just 19 ‘sells’ since the beginning of the month.

Now, as we approach the end of March, this trend doesn’t appear to be slowing down and is looking like it will be sustained throughout the duration of the COVID-19 pandemic.

The buying seems to be one or a combination of factors including an attempt to reassure shareholders, Directors topping up their stake at a discount and potentially knowing something the market doesn’t.

While only time will tell about the exact nature of company Directors’ buying, the last fortnight has produced another 304 buys and just 19 sells – it seems Director buying season is well and truly kicking on.

One of the most active Directors in the past month has been PolyNovo (ASX: PNV) Chairman, David Williams, who has continued to back in the medical device company despite its share price collapse. Having already invested nearly $2.5 million over four transactions between February 27 and March 9, Williams has made three more purchases since, as he continues to top up his indirect share in the company. On March 17, 23 and 30, Williams bought 100,000 shares each day at the share prices of $1.475, $1.40 and $1.54 – a further $441,500 investment. It brings Williams’ total holdings to 18 million ordinary shares which at today’s price of $1.60 (at time of writing), is worth $28.8 million. If Williams’ intention was to reassure shareholders, it’s certainly worked over the past week with PolyNovo’s share price rallying nearly 23 per cent.

Buy now pay later (BNPL) provider Afterpay (ASX: APT) has experienced a turbulent few weeks with its share price dropping and then gaining as much as 30 per cent between days. Last article looked at Non-executive Director Clifford Rosenberg’s $340,000 investment on March 11, however, in the last fortnight, three other Afterpay Directors have joined the buying club. Interim Chair Elana Rubin was the first to join on March 20, purchasing 7,621 shares at $13.101 followed by Non-executive Director Patrick O’Sullivan that same day, who bought 7,169 shares at $13.965. Three days later, fellow Non-executive Director, Dana Stalder purchased 19,300 shares at a much lower price of $8.938. The Afterpay share price has since rallied to $18.26 but if the last month is anything to go by, this could change very quickly.

It’s been a rough month for fellow BNPL provider FlexiGroup (ASX: FXL) which has seen its share price slashed by 67 per cent since the beginning of March. Directors of the company have topped up their stakes consistently throughout the period, including three transactions made in the last fortnight. Three Non-executive Directors hit the buy button, kicked off by Christine Christian purchasing 50,000 shares at 96.1 cents on March 3. This was followed on March 16 by Carole Campbell buying 25,000 shares at 99.9 cents and then Rajeev Dhawan buying 30,000 shares at 64 cents. The company’s current share price sits around 58 cents.

It’s much of the same story for BNPL ASX newcomer, Splitit (ASX: SPT), which has seen its share price halve this year from 67 cents to its current level of 34 cents. Following its IPO at the beginning of 2019, Splitit’s share price has continued to fall, however, Non-executive Director Thierry Denis must have seen some value in its share price of 24 cents on March 23, given his purchase of 100,000 direct shares in the company.

One of the few beneficiaries of the market crash has been gold miners, with investors grabbing hold of the safehaven asset sending it to record prices in the Australia currency. Late last week, the gold price broke its record high and hit AUD$2,720 on March 26 and in the three days prior, Directors of Gold Road Resources (ASX: GOR) begun a string of purchases. On March 23, Non-executive Director Brian Levet bought 40,000 shares at $1.05 which equates to an investment just shy of $42,000. The next day, he was joined by Non-executive Chairman Timothy Netscher, who bought 10,000 shares at $1.15 and Executive Director Justin Osborne who bought 75,000 shares at $1.185. It comes as Gold Road’s share price has made a big rally over the past two weeks, jumping from 81 cents on March 16 to now sit around $1.37.

Mining giant Rio Tinto (ASX: RIO) has begun to recover from its 52-week share price low of $72.77, which it reached two weeks. As it has steadily risen, Non-executive Director Megan Clark topped up her stake on March 20, purchasing 600 shares at $82.955 a pop, equating to an $82,955 investment. Rio Tinto’s share price has continued to recover since and now sits around $88.

Perhaps the most vulnerable companies at the moment are those in the oil sector, as the price of US crude on Tuesday, plunged to an 18-year low of US$20.09 a barrel. Carnarvon Petroleum (ASX: CVN) has seen its share price more than halve so far this year and the company’s CEO, Adrian Cook, has seen March as the time to top up his stake. On March 9, Cook bought 128,205 shares at 19.5 cents and then followed it up with another purchase on March 23, buying 100,000 shares at 12 cents – the combined investment value being $37,000. It brings Cook’s total holdings to just under 16 million shares which at today’s price of 15 cents, equals a $2.4 million investment.

It’s been a similar story for Australian oil and gas producer Santos (ASX: STO), which has had its share price also halved in the last month as the oil price war has escalated. Non-executive Director Guy Cowan bought 7,444 shares at $4.03 on March 16 and was joined a week later by fellow Non-executive Director Vanessa Guthrie who bought 20,109 shares at $2.98. While Santos’ share price currently sits at $3.50, much like the rest of the market, it’s a day by day proposition, particularly in the oil sector given its high volatility.

The flow-on effect of disruption in the resources sector has led to the share price of mining services companies to also fall given how interconnected the two are as explained in this previous Eureka Report article. One of the biggest mining services providers is Australian company Orica (ASX: ORI), which provides explosives and blasting equipment to the mining and quarry industries. The slowdown in demand for resources has meant less activity for companies like Orica and this is also reflected in its share price which has suffered throughout March. Orica’s Chairman, Malcolm Broomhead, bought 1,884 shares at $15.93 on March 24 and was joined on that same day by Non-executive Director Gene Tilbrook who purchased 1,570 shares at the same trade price.

The effect of the mining industry also extends to industrials company Monadelphous Group (ASX: MND), which constructs major projects and maintains and improves facilities for the resources sector. Within the past fortnight, two of its Non-executive Directors topped up their stake in the company starting with Chris Michelmore on March 20, who bought 10,000 shares at $9.417 equating to a $94,167 investment. He was joined to a lesser extent by Helen Gillies who purchased 169 shares at $10.938.

One of the very few sells within the past fortnight was made by NRW Holdings’ (ASX: NWH) CEO, Julian Pemberton to the tune of just under $5 million. The company provided an update to the ASX on March 25 which advised Pemberton had sold 3.65 million shares at $1.36 “to fund personal tax liabilities”. The buying pattern returned to normal on March 27 when NRW Holdings’ Non-Executive Director, Fiona Murdoch, bought 7,800 shares at $1.305.

There was a very noticeable trade made by CSL (ASX: CSL) Chairman, Brian McNamee a fortnight ago when he sold $5.6 million worth of shares. Since then however, two CSL Directors have somewhat calmed the nerves of investors through two purchases. Carolyn Hewson purchased 174 shares at $286.17 on March 16 which was followed by Chair of the human resources and remuneration committee, Megan Clark, who bought 175 shares at $283.967 four days later. CSL has been one of the few ASX companies that has been comparatively unscathed by the COVID-19 crisis and despite its share price reaching as low as $270 a share, its current price of $296.68 is actually higher than where it started the year at.

A fortnight ago we also looked at the finance sector and how the buying has extended to the Directors in the Big Four banks. While not a member of the Big Four, Suncorp Group (ASX: SUN) has seen a flurry of Director buying throughout March with five different Non-executive Directors backing in the company. Lindsay Tanner hit buy three times in March, purchasing two lots of 4,800 shares for $11.23 on March 3 and then a further 6,100 shares at $9.16 on March 16. Within the past two weeks, Douglas Mctaggart joined the buying list, purchasing 12,000 shares at $8.63, while Ian Hammond bought 15,000 shares at $7.89.

It wraps up what was a fascinating month of insider activity in ASX companies and the wave of buying is looking like continuing through April.  

While this article provided a run-through of Director purchases in larger companies, you can access a full list of all Director transactions on the ASX here.

Note: The share price of companies mentioned was quoted at the time of writing and may have changed since.