Sellers trump buyers, with Computershare to the fore

TURNOVER values declined on the directors' trades front this week, with sellers trumping those doing some buying.

By InvestSMART · 24 Sep 2011

By InvestSMART ·
24 Sep 2011

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TURNOVER values declined on the directors' trades front this week, with sellers trumping those doing some buying.

The scorecard registered $18.5 million to $4.6 million in favour of sellers and once again Computershare was prominent.

Chairman Christopher Morris continued to peel off stock and taking the place of his sister Penelope Maclagan as a seller was Stuart Crosby who was appointed chief executive six years ago.

Crosby, who many moons ago used to work at the stock exchange, has done very nicely indeed since joining Morris and co more than 12 years ago, and was paid $3.3 million for the latest year, which included $1.9 million of scrip-based payments.

The other day Crosby exercised some of his performance rights and collected 700,000 shares and he then sold 420,000 of them at $7.22 apiece.

Morris continues to sell shares and he has raised $5 million since earlier in the month. Computershare scrip has declined about 40 per cent since hitting nearly $12.90 in April last year.

Elsewhere in the exercise-and-sell department was Lachlan McKeough, who runs that exceptional performer Austbrokers Holdings, which has interests in insurance brokers and underwriting agencies. This week he exercised options at $2 and $3.47 a share and sold the resulting shares at $6.15.

Other chief executives who sold shares included Louis Gries of James Hardie Industries, with proceeds of $2.7 million, while Dominic Stevens over at Challenger collected nearly $1.9 million.

Meanwhile, on the buying front, Samuel Morgan topped the table with a $1 million-plus purchase of Fairfax Media scrip.

He sold Trade Me, an online transaction site to Fairfax in 2006. A non-executive director, he paid about 77? a share and boosted his stake nearly ninefold.

Fairfax managing director Gregory Hywood bought $100,000 worth of stock at the end of August.

Among other buyers, Ian Rodwell, the founder of Adcorp Australia and now a non-executive director, continued to soak up shares in the advertising agency and website design and development group.

The group reported a much improved June year result and the shares are fetching some 4 times pre-tax earnings.

Also nibbling away was Laurence Freedman, the chairman of Phoslock Water Solutions, a water technologies concern. Freedman founded funds manager Equitilink, which he sold in 2000.

The buying helped boost Freedman's stake in Phoslock by about 1 per cent to 17.7 per cent.

Phoslock, valued by the market at about $13 million, booked sales of $1.7 million in the latest year and lost money.

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Frequently Asked Questions about this Article…

What was the overall trend in directors' trades this week and how much did sellers outnumber buyers?

This week directors' trades were skewed toward selling, with the scorecard showing about $18.5 million in sales versus $4.6 million in purchases — in other words, sellers trumped buyers on turnover values.

Why was Computershare prominent in the recent directors' trades coverage?

Computershare featured heavily because senior insiders continued to sell stock: chairman Christopher Morris kept reducing his holding (raising about $5 million since earlier in the month), and CEO Stuart Crosby also exercised rights and sold shares. Computershare scrip has fallen roughly 40% from its near $12.90 peak in April last year, a decline noted in the coverage.

What did Stuart Crosby do with his Computershare performance rights and shares?

Stuart Crosby exercised some performance rights, which gave him 700,000 shares, and he then sold 420,000 of those shares at $7.22 each. The article also notes Crosby was paid about $3.3 million in the latest year, including $1.9 million in scrip-based payments.

How much has Computershare's share price changed since its peak and how is that mentioned in the article?

The article reports Computershare scrip has declined by about 40% since hitting nearly $12.90 in April last year, a context given alongside ongoing insider selling by directors such as Christopher Morris and Stuart Crosby.

Which other executives exercised options or sold significant holdings this week?

Examples in the article include Lachlan McKeough of Austbrokers Holdings, who exercised options at $2 and $3.47 and sold the resulting shares at $6.15, and chief executives who sold stock for sizeable proceeds such as Louis Gries of James Hardie Industries (about $2.7 million) and Dominic Stevens of Challenger (nearly $1.9 million).

Who were the notable director buyers and what stakes did they increase?

On the buying front Samuel Morgan topped the table with a more-than-$1 million purchase of Fairfax Media stock. Fairfax managing director Gregory Hywood bought about $100,000 of stock at the end of August. Ian Rodwell continued to buy shares in Adcorp Australia after an improved June-year result, and Laurence Freedman increased his stake in Phoslock Water Solutions by roughly 1% to about 17.7%.

What does the article say about Phoslock Water Solutions and Laurence Freedman's investment?

The article notes Laurence Freedman, chairman of Phoslock, boosted his stake in the water-technology company by about 1% to reach roughly 17.7%. It also reports Phoslock is valued by the market at about $13 million, booked sales of $1.7 million in the latest year and operated at a loss.

What practical points should everyday investors take from the article's coverage of directors' trades?

The article highlights that insider activity can be mixed — sellers outnumbered buyers this week and some high-profile insiders sold substantial parcels, while other directors used share purchases to increase stakes. For everyday investors, director trades are one datapoint to watch (not a standalone signal): pay attention to size and frequency of trades and the company context cited, such as recent results or notable share-price moves mentioned in the coverage.