Sellers dominate the market

MANAGING directors made up the bulk of the selling this week, with their efforts contributing to selling exceeding buying by threefold.

By InvestSMART · 29 Sep 2012

By InvestSMART ·
29 Sep 2012

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MANAGING directors made up the bulk of the selling this week, with their efforts contributing to selling exceeding buying by threefold.

The scorecard for the week registered about $19 million to $6.3 million.

Heading the sellers was FlexiGroup chief executive John DeLano, who disposed of a swag of founders options for an undisclosed sum, which will run into the millions.

FlexiGroup listed in 2006 following a float at $2 a share.

It proved to be a white-knuckle ride for punters, with the shares hitting the low 20s cents, that is in 2008. But those who held their nerve in Andrew Abercrombie's lease and rental financing group have done OK, with the scrip now fetching $3.22.

Mr DeLano will step down at the end of the year and he said he intended to retain his remaining stake while he was consulting to FlexiGroup.

Elsewhere among stocks that have performed well, the managing director of Data#3, John Grant, peeled off 35 per cent of his stake.

The information technology solutions group has provided good returns to shareholders over nearly a decade but earnings in the latest year fell 9 per cent on sales that increased 16 per cent.

Mr Grant noted that while earnings were down, they were ahead of the long-term trend over the past five years they have grown at 14 per cent compound a year.

Meanwhile, some profitable option exercising and selling was conducted by Karl Simich, the managing director of Sandfire Resources, a copper and goldminer.

This has been a terrific success story. In 2009, the shares were fetching less than 5? yesterday they closed at $8.37.

Mr Simich joined the board in 2007, was appointed managing director in 2009 and has done nicely indeed. He has just exercised 800,000 options at 60? each, which cost him $480,000. He sold 300,000 shares at $8.80 each, raising $2.6 million. His retained share stake, not including some more options, is worth about $37 million.

On the buying side, a couple of Biota directors made a rare appearance, while the Millner family outlaid some petty change when they bought $2.8 million of stock in Washington H. Soul Pattinson and Company.

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Frequently Asked Questions about this Article…

What was the overall balance of buying versus selling in the market this week?

Selling dominated the week, with selling exceeding buying by about threefold. The article's scorecard recorded roughly $19 million of selling versus $6.3 million of buying, with managing directors making up the bulk of the selling activity.

Why did FlexiGroup chief executive John DeLano sell founders' options and what did the article report about his remaining stake?

John DeLano disposed of a bundle of founders' options for an undisclosed sum the article says will run into the millions. The piece notes he will step down at the end of the year and intends to retain his remaining stake while acting as a consultant to FlexiGroup.

How has FlexiGroup's share price performed historically according to the article?

The article states FlexiGroup listed in 2006 at $2 a share, fell to the low 20s of cents in 2008, and has since recovered—at the time of the article the scrip was trading at $3.22.

What insider transactions did Data3's managing director John Grant make and what does the company’s recent performance look like?

John Grant peeled off 35% of his stake in Data3. The article reports Data3 has provided good returns over nearly a decade, though in the latest year earnings fell 9% while sales increased 16%. Over the past five years, earnings have grown at about a 14% compound annual rate.

What option exercise and share-sale activity did Sandfire Resources' managing director Karl Simich undertake?

Karl Simich exercised 800,000 options at 60 cents each, costing him $480,000, and sold 300,000 shares at $8.80 each, raising $2.6 million. The article says his retained share stake (not including some further options) is worth about $37 million, and notes Sandfire shares traded under $5 in 2009 and closed at $8.37 recently.

Were there any notable director or family buys mentioned in the article?

Yes. A couple of Biota directors made rare buy purchases, and the Millner family purchased about $2.8 million of stock in Washington H. Soul Pattinson and Company, according to the article.

How should everyday investors view director selling and option exercises reported here?

The article highlights that much of the week's selling came from managing directors and that some transactions were tied to option exercises or executives stepping down. It suggests looking at the context given (for example, DeLano's upcoming departure or Simich's option exercise and retained stake) rather than treating every insider sale the same.

How large were the corporate insider and family trades in dollar terms this week?

The article's weekly scorecard put selling at about $19 million against $6.3 million of buying. Individual examples include an undisclosed multi‑million sum from FlexiGroup founders' options, Karl Simich's $480,000 cost to exercise options and $2.6 million raised from share sales, and the Millner family's $2.8 million purchase of Washington H. Soul Pattinson stock.