Cochlear falls on downgrade but those at top buy up large
The company issued a downgrade to the effect that earnings would be lower for the second year in a row.
Now, that was not exactly bullish news for a stock that was selling at more than 20 times earnings. Punters reacted accordingly. The shares fell from $64.54 to $52.71 on Monday and, the next day, chief executive Christopher Roberts, chairman Rick Holliday-Smith and non-executive director Andrew Denver all bought stock. They paid between $54.98 and $55.58, and the shares the next day got up to $58.25, before closing the week at $55.65.
Elsewhere on the beaten-up stock front, two directors of drilling concern Boart Longyear joined three of their boardroom colleagues who bought recently. The stock fell 7 per cent on Friday to 66¢.
Among other buyers, Starpharma Holdings boss Jacinth Fairley stepped up. The scrip is at levels last seen in early 2011.
Alan Johnstone - a long-time director at Pental, formerly Symex Holdings - bought shares at just 1.4¢. The soap group, with 1.5 billion shares on issue, is now valued by the market at under $20 million. In its heyday, around 2001, the company was valued at close to $200 million.
Among sellers, Oil Search managing director Peter Botten said he had sold some shares to pay tax that would result from the exercising of performance rights. "This sale in no way signals any change in my confidence that the value of Oil Search shares will continue to grow over the coming years," he said.
The reporter owns COH shares.
Frequently Asked Questions about this Article…
Cochlear issued a downgrade saying earnings would be lower for the second year in a row, which weighed on a stock trading at more than 20 times earnings. The shares dropped from $64.54 to $52.71 on the Monday the downgrade was released.
Chief executive Christopher Roberts, chairman Rick Holliday-Smith and non-executive director Andrew Denver all bought Cochlear shares the day after the sell-off. They paid between $54.98 and $55.58 per share.
Yes. After the directors bought between $54.98 and $55.58, the shares rose to as high as $58.25 the next day and closed the week at $55.65, indicating the purchases coincided with a bounce in the share price.
When company directors buy shares after a downturn — as happened at Cochlear and at several beaten-up stocks in the article — many investors interpret those purchases as a personal vote of confidence from insiders. That said, insider buying is one factor to consider alongside company fundamentals and your own risk tolerance.
Two directors of drilling company Boart Longyear joined three boardroom colleagues who had recently bought shares. Despite the director buying activity, the stock fell 7% on Friday to 66¢.
Starpharma Holdings boss Jacinth Fairley purchased shares, with the article noting the scrip is trading at levels last seen in early 2011 — a detail that highlights how long the stock has been depressed compared with past prices.
Long-time director Alan Johnstone bought Pental shares at just 1.4¢. Pental has about 1.5 billion shares on issue and is valued by the market at under $20 million, compared with a peak market value close to $200 million around 2001.
Oil Search managing director Peter Botten sold some shares to pay the tax arising from the exercising of performance rights. He said the sale 'in no way signals any change in my confidence that the value of Oil Search shares will continue to grow over the coming years.'
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