Director Deeds: Twiggy leads the resource rush

The resources sector has been a big mover of late, in both directions, and the following is almost a trade large enough to account for that statement. Few could pull it off.

Fortescue’s Andrew ‘Twiggy’ Forrest spent more than $15 million on company shares on October 26, increasing his holding from 32.46 per cent to 33.87 per cent. He purchased at an average price of $3.80 per share. The company has since climbed to reach nearly $4.20, at time of writing. The purchase was attributed to Forrest, as well as Forrest Family Investments Group and Minderoo Group. Forrest has imbued the shareholder base shortly after Fortescue announced a 12-month shareholder buy-back of up to $500 million.

Timely, after the share price recovery, Thomas Paul of Regis Resources sold nearly $728,000 worth of stock. Paul exchanged shares for cash on October 24. But a couple of days before, on October 22, James Mactier exchanged cash for shares in the company. Not exactly an equal trade-off, as Mactier’s spending amounted to $106,750, it may seem to say more about individual positions than company prospects – Regis was slashed a few months back but has since been the recipient of a couple of recent broker upgrades, including Citi and Credit Suisse, after posting a positive quarterly.

On balance, there has been more buying than selling by directors in the resources space lately anyway, which is part of the reason why during this last quarter’s sell-off the materials sector has largely held up comparatively. Peter Bradford spent $200,500 on Independence Group shares on October 31, the same day Syrah Resources’ Lisa Bahash spent nearly $25,000 on shares. Syrah scored a detailed mention in our last Director Deeds. 

Another familiar name to this column, John Welborn, the boss of Resolute Mining, flung another $50,000-odd at his company. Resolute’s share price has felt the brunt of the company posting weaker than expected production for first-quarter 2019, but brokers such as Macquarie have since indicated they still expect the company to outperform based on high-quality core assets like Syama increasingly operating at a lower cost.  

Directors of several smaller miners have also been spending more cash in recent weeks, like Rodney Joyce and Sally-Anne Layman of gold producer Gascoyne Resources, who spent $116,500 between the two of them to round out October. Layman is now the company’s chair too. They clearly felt the need to vote with their wallets, considering the departure of two other directors earlier in the month collapsed the share price – one of these directors, founder of Gold Road Resources Ian Murray, having resigned within weeks of his appointment “after undertaking due diligence” of the company, and the other being managing director Mike Dunbar who had held the post since March 2011. Another lesson, when longstanding management leave, it will create chaos – the company is a long way from its 60c yearly high, plunging 50 per cent on the news to around 10c.

A rare earth buying opportunity. Lynas Corporation, a company with nearly a $1.4 billion market capitalisation at the heart of the rare earths sector, has processed three director purchases all on the same day. Mike Harding, Grant Murdoch and Philippe Etienne all bought stock on October 30. Harding spent nearly $100,000, Murdoch put down $92,500, and Etienne a little less at $46,250. Shares in the company dived in late September, shedding 25 per cent, as the future of its Malaysia rare earths refinery was thrown into question due to a new Malaysian political leader.

Around the same time several Nufarm directors were issued shares, CEO Gregory Hunt spent over $107,000 on stock on October 30. The agricultural chemical company has been subsiding to 52-week share price lows, sinking from the 9.50s back in June to the low-5.30s last month. The heavily-shorted Nufarm’s recent results met its July guidance, however, shareholders are fixated on the fact Australia is suffering from its worst drought in hundreds of years, which is taking a direct toll on Nufarm’s bottom line.

All year, the stock has been chopped and changed like it was put through a Breville blender; at its mid-point last week one director dived in, spending nearly $60,000 in the process. Kate Wright bought 5000 Breville shares on October 26, at an average price of $11.82 per share. Breville rose on all metrics in its full-year report, much of that owing to growth in the US, and has seen a string of insider activity since as its shares have been coming off. Solomon Lew of Premier Investments and Myer fame also continues to creep into the Breville registry.

Another director buying into Myer, as the company continues to shake on the prospect of a spill (timestamped at the end of October, Lew really isn’t happy). All on the same day, the fallen department store saw newly appointed non-executive director Lyndsey Cattermole spend nearly $50,000, David Whittle just shy of $28,000, and Julie-Ann Morrison almost $8000. They’re small amounts, yet representative of a much bigger trend at the contested retailer, which is plagued with a double-edged sword of management issues and falling consumer spending.

Down the shopping mall strip, another director has spent a little more. Howard Mowlem put down a little over $74,000 for 10,000 more shares in Super Retail on October 31, one day after Peter Everingham put down nearly $52,000. Super Retail’s long-time CEO Peter Birtles announced his resignation in October, that, and another word of a more “cautious consumer” subsequently shot the share price to pieces. Clearly some have a hunch it was well oversold.

Entertaining the idea that shares will return to where they once were, CEO Jane Hastings of Event Hospitality and Entertainment spent nearly $48,000 on company stock on October 26. The film business has continued to lose its lustre this year, but Event’s boutique hotels division, which contains the likes of QT and Rydges, has been outshining this. The market, however, seems to be losing faith in the narrative.

Stop right there. Altium, no stranger to this column, has seen Wendy Stops spend over $104,000 on IT shares. The stock featured in the last edition of Director Deeds, when the chairman dumped more than $930,000 worth of stock as the IT sector plunged worldwide.

Glancing at the chart, and nothing more, the share price has been drunk all year. Lauri Shanahan of Treasury Wine Estates spent just shy of $33,000 at the registry after the most recent share price tumble on October 26. It gave the registry some liquid confidence, with the company rearing its head from the cellar door, at least for now. Treasury Wine often moves on macro fears, being a big exporter to China and the US.

At it again was Nicholas Politis, boss of AP Eagers, who earns a mention in a high percentage of these roundups. Politis spent over $69,000 on shares to round out the month, after having spent $85,000 and $76,000 on shares in separate instalments in the days before. They’re certainly got a need for speed. Rival boss John McConnell has revved into competitor Automotive Group Holdings’ share registry too, spending almost $170,000 on shares on November 1.

Over the last few years, its directors have been putting more and more skin in the game (last in September), often around interesting times. Christopher Campbell popped another $85,000-plus into Academies Australasia, soon after John Schlederer spent $21,750 himself.