Director Deeds: Part of the furniture

For a full run-down on what directors behind ASX-listed companies are doing behind the register, click here.

For extended research on the companies behind Director Deeds, click here.

This version of Director Deeds reveals how well recent financial results have been received by company insiders.

While even insiders can be caught off guard, and others may draw on tricks of the trade, so to speak, insider activity can still speak volumes about a company’s future. It’s all in the eyes of the beholder.

After digesting reports, directors in the consumer sector got spending. Mark Powell at JB Hi-Fi was among the first up to bat, although he just spent around $35,000. The electronics retailer defied the doom and gloom to increase its full-year profit by 7.1 per cent to $250 million. Hardware sales have remained robust, despite the retail downturn, where soft goods such as clothing and accessories have fallen hard.

No thank you, Mr Scali. The biggest shareholder at Nick Scali in no longer part of the furniture after selling his entire stake in the company. The shareholder also happens to be Nick Scali’s major supplier. Jason Furniture offloaded the stake for less than it paid for it initially, which was $77 million at $7 per share. The shares were dumped at $6.85 per share. Eureka Report spoke with CEO Anthony Scali on August 21, with a hallmark of the interview being Nick Scali’s ‘standout’ profit margin, which struck 63 per cent in recent results. Scali noted the margin improved not through higher prices, but better management of inventory, and alluded to potentially higher marhgins in the future. Nick Scali buys all its stock direct from factories, never through wholesalers. 

Bingo! A couple of directors at the Tartak family’s Bingo Industries were feeling lucky and picked up some more shares. Michael Coleman and Barry Buffier each spent in the tens of thousands on Bingo shares on August 23. Both purchases took place on market. This time around, however, it wasn’t exactly a case of striking while the iron was hot. The waste management company saw its share price plummet after posting a 41.4 per cent drop in full-year profit. The Tartaks fared among the worst this reporting season. Net debt at Bingo also blew out from $136.6 million in the 2018 financial year to $275.8 million. It may come as no surprise these purchases took place after the fact, with the directors perhaps optimistic about its full pipeline of projects ahead.

In a material world, should we bank on rubbish and plastics? At least that’s what the Rich Listers may be suggesting. Raphael Geminder, Lyndsey Cattermole, Raymond Horsburgh and Carmen Chua each tipped a little more money into Pact Group, the Geminder family’s packaging business. The in-group bought shares between August 15 and 20, after the Pact share price had slid nearly 20 per cent in the first couple of weeks of the month. Geminder spent the most, around $19 million across three days, while the others each spent in the tens of thousands. There’s a new CEO at Pact, Sanjay Dayal, who is trying to recover lost ground through a strategic review that has meant closing a few of Pact’s 80 factories.

Breville blended up a full-year report diced with double-digit profit, revenue, EBITDA and dividend growth, but it still wasn’t enough to entice shareholders. Why didn’t everyone think it tasted good? Well, the kitchen appliance group had particularly strong revenue growth in North America and Europe, with the former now making up more than half its customers. But it has come to light in recent weeks that Breville’s US customers are paying for tariffs through price hikes. The market doesn’t seem to like the idea of a company’s pricing strategy being hinged on the whims of two erratic world leaders. It was enough to send Breville’s share price falling, which not long before had hit an all-time high trading on double-digit multiples. Breville is trying to break up the impact, by entering new European markets next year. Timothy Antonie spent around $75,000 on shares, Sally Herman a little less than this, as Steven Fisher and Peter Cowan each spent around $85,000, and Dean Howell threw in $40,000 for good measure. The buying spree kicked off on August 16 and continued over the course of the following week. It hasn’t done much for the share price.

Tassal Group, in a similar vein, has been taken with director purchases over the last little while. Last month, John Watson and Trevor Gerber chucked another $100,00 into the tank. It comes as no surprise given Tassal has just hatched its grand prawns plan, asking investors for another $109 million to fund its Queensland prawn ambitions, offered at a then discount of $4.40 per share. Directors bought their shares between $4.35 and $4.41, which means, with Tassal now trading around $4.29, these stocks are underwater. Tassal still believes salmon prices are headed upstream, which is a good thing, but the new prawn move is all about diversification.  

If the China story could be told through any stock, it would likely be Blackmores. But whether we’re at the beginning, middle or end of the story is anyone’s guess. Christine Holman spent a little over $65,000 on shares in what was once the ASX darling, as she spent around $100,000 at WiseTech, which is one of the new darlings. Blackmores, along with others like A2 Milk and Treasury Wine Estates, has been laid bare to trade tensions between the US and China. Some, namely Treasury Wine Estates, are staring down the barrel of other problems at the same time, like battling short-seller attacks and forever changing Chinese regulation. All are hoping the Chinese economy holds up. Blackmores has already felt the bite, losing 50 per cent of its share price in 12 months. Directors have taken to panacea the share price slide, with this most recent purchase coming from the newest appointment to the Blackmores board.

With the Aussie dollar falling, you would think the streets of tourist destinations would be lined with gold. While the Gold Coast has been flooded with inbound tourism, its star properties aren’t reveling with high rollers. Through its recent results, The Star Entertainment Group, which keeps upping its exposure to south east Queensland, showed what happens when the high rollers stop coming to town. Things slow down. So a few directors have tried to speed things up again, spending between $75,000 to $200,000 each on shares after the penny dropped on slowing profits. All shares were bought shy of the $4-mark, with the share price since holding above this level.

Taking a few punts at the TAB. Three directors put bets on green over at Tabcorp, with the purchases ranging from $20,000 up to $110,000. Lotteries led the charge on Tabcorp’s full-year financials, a result of its merger with Tatts during the reporting period, driven by a couple of big Powerball wins. Tabcorp shareholders didn’t lift a finger on reporting day, so these three directors buying shares was always going to look like heavy lifting.