Director Deeds: Small caps, big tech, and 'healthy' buys

It may be April, but whether that means more investors or directors are playing foolish games is anyone's guess, for now. Only time can render the many buys across many areas of the market worthless, or not.

If it’s not the sales, it’s the director deeds that draw us to Adairs. The homewares retailer is no stranger to director transactions, but this director hasn’t purchased shares there since the final months of 2017. Michael Butler is the latest director to buy a piece of the Adairs pie, spending around $100,000 at the shops just the other day. However, unlike purchases that have come before, this one took place when the shares were heavily discounted – at least compared to where they were trading last year, that is. The first-quarter is typically the weakest for retailers. Traditionally, there’s a lull after Christmas, consumers get bombarded with bills and fees, so straight into utilities, and the consumer sector only starts to see a reprieve in the lead-up to the new financial year. A reprieve, because that’s the extent of the relief that discretionary retailers have seen in the last couple of years. Adairs was tracking around a 52-week low at the time. 

A rare sight in retail. We're talking Kogan. Hot on the heels after being appointed an independent non-executive director at the retailer in March, Michael Hirschowitz spent more than $50,000 on Kogan shares on April 3. Hirschowitz was instrumental in building Accent Group over a 20-year period, which is the owner of footwear brands including Platypus, Dr Martens and The Athlete’s Foot. Kogan has been creeping into apparel, positioning itself as an ‘everything’ store, even more so since Amazon’s entry into Australia. Kogan last made Director Deeds news when founders Ruslan Kogan and David Shafer offloaded tens of millions of dollars’ worth of shares in September. This marks the first director move since then. 

From bargain-bottom retail to Helloworld! Garry Hounsell, of Myer fame, spent more than $100,000 on Helloworld shares in early April. This is the seventh director purchase at Helloworld in 2019 to date, with four directors spending their dosh to take total spend to nearly $700,000. Founders Cinzia and Andrew Burns still hold the bulk of the company though, or around 17 per cent of all outstanding shares.

Murray River Organics’ directors Valentina Tripp and Andrew Monk spent more than $50,000 between the pair of them. Organics appears to be one of the more promising areas of consumer staples right now. Murray River Organics is carried by most major supermarkets, through several product lines including Gobble. Tripp and Monk gobbled up the shares on April 4, at around 9c, a steep drop below where shares were trading last year, at 38c. The company just launched dried fruit products in Japan in March, aiming to ride on Australia's lean and green image. 

It’s certainly not the first, and it probably won’t be the last time this company finds itself buried in Director Deeds. Keith Skinner, Jackie McArthur and Richard Davis, from the funeral home business InvoCare, all spent money on shares these last few weeks. This may come as no surprise.

Nothing is certain in life, except death and taxes – and the fact that people will learn something or other in-between. Hopeful about population growth, and banking on favourable immigration policies, Academies Australasia director Christopher Campbell spent more than $30,000 on a parcel of shares in late March.

A big feature of last month’s column, the energy is once more flowing through this particular sector of the market. Heavily sold on Norway's sovereign wealth fund selldown earlier in the year on environmental grounds, and bearing the weight of a volatile oil price, energy companies have been all over the shop. Could they have been oversold? Either that, or directors just want to drum up some conviction. State Gas, Meridian Energy, Washington H. Soul Pattinson, Bid Energy and Armour were just some of the companies in director sights these last couple of weeks, different names to those we saw in last month's column. Of course, it's still difficult to determine if this is a good kind of energy, but oil prices did recently hit 5-month highs only at the start of April.

Let’s get raw about one particular raw material – we’re talking about coal. Charles Fear certainly seems to be, based on the fact he sold around $70,000 worth of Atrum Coal on April 5. That amount may not seem material, but could it be indicative? We’re currently seeing mixed messages around Australia’s appetite for coal, based on whether the demand is still there from China, which is notorious for its patchy data. Imports are falling as China ramps up environmental checks, meaning shipments now take 45 days or longer to clear customs. Australian coal miners are in the firing line, seemingly while other countries remain out of the crossfire. Beijing’s move on Australian coal is clearly putting pressure on our big miners, such as New Hope and Whitehaven, which have been facing an uphill battle this year due to production cuts. So, is Atrum in the same boat? Not exactly. From its early drillings, explorer Atrum’s hard coal coking is anticipated to be just as premium as that currently being exported from Australia to China.

Beyond the usual Facebook drama and tech talk, there may be some interesting stories playing out in the Australian market. WiseTech has earned itself a reputation among the WAAX (WiseTech, Afterpay, Appen, Xero) set, an Australian tech-tilted acronym that followed FAANG (Facebook, Amazon, Apple, Netflix, Google) references in the US. WiseTech’s Michael Gregg has spent more than $120,000 so far this month. The company may not be in the league of giants, or at least not yet, but it effectively handles the back-end software for global logistics giants. Meanwhile, marketing-tech company GrowthOps closed its March with two directors tipping in about $20 million off-market. Paul Mansfield accounted for the bulk of this, or $17 million all up. Following an 8-company acquisition spree before listing in March 2018, the company recently went on to post a $48 million loss, and embark on a $5 million share buyback. GrowthOps has significantly underperformed the index, and as such, has decided to return capital to shareholders this way as it’s left with cash on the balance sheet after a failed acquisition. Mar-tech is clearly more than internet banners and billboards though, with a different-yet-related company playing in this space being Dubber. Unlike GrowthOps’ diversified strategy, Dubber is strictly focused on call and communication recording software. Businesses are picking up what it’s putting down. On the back of raising $22 million from global investors and plans to invest $8.8 million of this into arrangements with 92 telco providers, director Steve McGovern spent more than $720,000 on Dubber shares.

It wouldn’t be an Australian market round-up without commentary about the healthcare sector. On one side, this is a defensive sector, guarded by traditional healthcare and hospital operators, like Sigma and Ramsay. On the other side, this sector is increasingly becoming one about growth, thanks to the crop of Australian bio-techs that have sprung up on the market over the last half-decade. Here, this month, we saw all ‘buys’ and one ‘sell’. OncoSil, is one we are apt to point out right now, even just for the journey it has been on above all else. Martin Cross spent more than $20,000 on Oncosil shares earlier this month, which may seem like chump change, but considering some investors deemed the company dead in the water it may mean something. The medical device company digging into pancreactic cancer recently reported that British regulators have told it that "insufficient clinical benefit has been demonstrated" for its cancer treatment to receive a CE Mark allowing it to be sold across the European Union. The company was "extremely disappointed" in the decision, with its shares immediately hitting a 5-year low.

Among the other 'healthy' buys, some of these companies may seem a little too small still in market capitalisation for a mention, like an ASX-listed sperm separator and another explorer trying to improve upon chemotherapy. However, Memphasys, the minnow working on improving IVF solutions, saw one director spend more than $400,000, on the very same day another director spent more than $900,000. While it's still being put under the microscope, and yet to be put to the ultimate test as it's still in early trials, this business is working on ways to tilt the poor chances of conceiving in an IVF-seeking couple’s favour. Memphasys is currently collaborating with Monash IVF on a device called Felix, which sorts and separates sperm for quality control in reportedly a more innovative way. This may all be in one ear and out the other, as management has been in one door and out the other at Memphasys for the last decade, with not much to show for it in-between. Yet there’s fresh blood in the executive team now, and they’re obviously putting their money where their mouth is.     

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.