Newcrest, a cautionary tale

Recent director buying of scrip in the goldminer Newcrest Mining provides a cautionary tale for follow-the-insider-money adherents.

In May, three directors stepped up to the roulette wheel and put more than $430,000 into the stock.

These included such Newcrest eminences as chairman and former ANZ Bank heavy Donald Penn Mercer, Newcrest chief Greg Robinson and non-executive director Vince Gauci, a former MIM Holdings managing-director.

They paid anywhere between $14.51 and $17.50 a share, the buying following the biggest gold price fall in three decades in April.

In June, the scrip went into a nosedive amid news of a restructuring and a kerfuffle over exactly what various analysts were told in briefings by Newcrest.

The shares continued to weaken, and they hit $9.07 some eight trading days ago.

So, what to do? Well, load up the truck. The other day Donald Mercer paid $9.41 a share, Gregory Robinson $9.83, Philip Aiken $9.70, Richard Knight $9.87, Vince Gauci $9.60, Richard Lee $9.65 and former company doctor John Menzies Spark paid $9.82. Some of the buying does not appear in the accompanying table.

What might be called the second tranche of director buying cost close enough to $530,000.

Now, the shares closed the week at $10.76, which means to varying degrees some of the Newcrest board are ahead of the game on their latest buying.

Meanwhile, the overall scorecard registered $2.8 million to about $13 million in favour of sellers. Taking a big hand in proceedings was Terence Streeter, chairman of Western Areas, a nickel miner.

He sold at $2.41 a share with proceeds used to repay a loan, pay tax and to make other investments.

A week after he sold the company announced better-than-guidance numbers and a healthy cash position. The scrip closed the week at $2.92. Nice.