Director Deeds: Buying into the dips

It was high time – or more fittingly, 'low' time – to buy for many ASX directors this month, which adds up considering how sharply the market came off during this two-week reporting period.

Where we had founders selling in our last installment of Director Deeds, this time, we were overrun with buyers.

Leaping at the opportunity, smack bang in the middle of the month, were several Domain directors. Gail Hambly purchased 10,000 shares at $2.6499 each, the same day managing director Jason Pellegrino purchased 40,000 shares at $2.67 a piece for a transaction value of $76,000. This came two days after Greg Ellis added an extra 10,581 to his name for $2.615 per share on October 17, a day after newly annointed director chairman Nick Falloon popped 50,000 shares into his family super fund for $2.65. The list goes on. Geoff Kleemann purchased shares the same day, as well as Patrick Allaway and Diana Eilert. These directors perhaps saw it as an even more timely occasion than others to reaffirm the market, considering how sharply Domain itself fell on a trading update the week before – and it has worked, with Domain's share price since heading up. 

Elsewhere in real estate, Scentre Group directors have also taken advantage of the sell-down and negative news to load up at lower prices. Carolyn Kay bought 30,000 shares, Andrew Harmos acquired 10,000, and Brian Schwartz a little over 6500 shares. Kay’s purchase cost more than $116,000.

Sims Metal Management’s James Thompson spent a little less than $50,000 on shares. Thompson is the chair of the safety, health, environment, community and sustainability committee, as well as a member of the finance and investment committee and remuneration committee. A week prior the company reported solid financial results, including an after-tax profit up 60 per cent to $192 million, but it’s having troubles with its global customer base due to trade tensions, hence, the share price has dropped more than 30 per cent from its highs. Thompson is a well-heeled executive, having worked for one of the world’s largest fertiliser companies listed on the New York Stock Exchange, after spending 30 years in the steel industry.

Could a takeover be on the horizon? Malaysian property player Seng Huang Lee of Mulpha has doubled down on Aveo Group stock, adding more stapled securities to his holding. It’s believed Seng is accruing stock for one of two reasons, either to resell down the track when the share price snaps its downtrend, or with the intention of later making a takeover bid. Mulpha currently owns 23.97 per cent of the company. Long-time Aveo boss Geoff Grady has a 0.32 per cent stake. Mulpha's Lee also bought into Ardent Leisure last year, the parent company of the troubled Dreamworld.

As other Syrah Resources directors participated in the share purchase plan, one director stumped up his own cash. Sam Riggall bought 11,000 shares on market at a price of $1.75 per share. It has long been one of the most shorted stocks on the ASX, with shareholders questioning when it will end. Have we been given a sign the tide will soon go out? Around the time UBS ceased its position as a substantial shareholder, Syrah directors were 'doing the deeds'. UBS is now the 16th largest shareholder, with AustralianSuper number one by a long shot. Syrah has the largest graphite mine in the world, but its critics question whether demand for the material can meet the supply. 

Another stock with a ‘short’ reputation, agricultural chemical company Nufarm, has been seeded with more capital from one of its directors. Marie McDonald spent nearly $40,000 on shares in the company that supplies herbicides and pesticides worldwide, at prices nearing five-year lows (although it has continued to sink). Nufarm is caught in the middle of the “worst ever drought” and currently raising capital, after having posted a statutory net loss after tax of $15.6 million this financial year compared to a $114 million profit the year before. After completing its institutional capital raise earlier in the month, it wrapped up its retail raise on October 22, noting a 46 per cent shareholder participation rate

As Australia’s information technology index plunged to its lowest levels since October 2013, a director at Altium dumped $930,479 worth of stock. Chairman Samuel Weiss sold his stock on October 12, just one day after the index lodged that low level, on the back of a ruling by the US Treasury Department its Federal Government will in November tighten rules on foreign investment in sensitive industries – like tech and telcos – which instantly sunk Chinese tech heavyweights.

After approximately a two-year suspension from ASX quotation, Cape Range was reinstated at the end of last year. Then, the ASX questioned price and volume activity in July to suspend the company again until September. However, one director at least may have been concerned by all of this, selling $166,000 of his holding in the accounting company on October 10 and 11, two weeks after the company posted a $35 million net loss. The director, Wayne Johnson, has more than 30 years of experience in Australia, New Zealand and North America, with much of this in software and technology.

Another software company, but we're processing a 'buy' this time. Bernard Campbell spent nearly $48,000 on shares in CSG Limited on October 10, a company whose share price has been falling since the end of 2015. He acquired 250,000 shares, making this his first purchase as a non-executive director of the ‘tech as a subscription’ business. Campbell is known for establishing the asset finance business of Pepper Group in October 2014, a division where he is currently CEO.

What can $42,000 get you? At $30 per kilo, a few thousand pieces of Tassal salmon, or 10,000 shares in the company – take your pick. John Watson went for the latter, taking $4.20 per share on October 16. He last purchased Tassal shares at the start of October, and if it means anything, word on the fishmonger strip over the weekend is “the price of salmon is headed upstream”. Watson returned to the Tassal board in March 2018, having previously served as a non-executive director there between October 2003 and October 2015, and holding down positions on several other boards of listed and unlisted Australian and New Zealand companies.

What about trying to buy copper, zinc and gold with $65,000, at current market rates? Good luck. A director of a copper, zinc and gold explorer successfully spent nearly $65,000 on shares though on October 11. The timing seemed less relevant to the company’s share price as it did the overall direction of the Australian market that day. As the ASX joined the global sell-down, except for some constituents like our gold producers, Superior Lake Resources director Grant Davey stood out when he stumped up more cash. Its directors have been waiting in the wings for months now, as the company has struggled to regain ground since August. Davey is no stranger to big transactions, trading as a director of Boss Resources and Matador Mining in the past.

Directors of Aspermont, a trade media company for the mining industry, acquired two parcels on the same day. Geoff Donohue and Christian West scored shares together, and while the company and parcels are quite small, they were transactions worth noting in a world where executive pay is everyone’s business. All Aspermont executive directors voluntarily elected to take shares in lieu of their annual cash bonus. All shares will be issued at the volume weighted average price for the 90 days prior to issuance. The update came with a note that subscriptions and business in general were doing well. 

An anomaly to end the column, a ‘sell’ to break the ‘buy’ pattern – in a mining services company. But this one seems to have little bearing to the company itself, considering it’s providing tech solutions to big names like Rio Tinto and BHP, and on the back of the boom, has seen its share price fly since the middle of 2016. Anthony Wooles, chairman of Imdex, disposed of 250,000 shares at $1.24 a pop “to discharge tax obligations to the ATO”.