You are currently browsing the monthly archive for June 2009.

The headline above features in todays FT (link to article).

The article quotes research from TrimTabs as follows:

‘Share sales by so-called company insiders are outstripping purchases so far this month by more than 22 times. TrimTabs, the investment research company, said insiders of S&P 500 listed companies have unloaded $2.6bn in shares in June, compared with purchases of just $120m.

“The smartest players in the US stock market – the top insiders who run public companies – are not betting their own money on an economic recovery,” said Charles Biderman, chief executive of TrimTabs.’

See articles discussing this on followthedirectors as follows:

June 6th ‘Despite Greenshoots Insider Sales Spike’

May 4th ‘Directors selling shares. Is the market expensive?’

I want to talk about share purchases made by BT Group plc (BT.A, 92.5p) Directors and PDMRs on June 1st, namely Ian Livingstone, Tony Chanmugan, Sally Davis, Rod Louwhoff, Gavin Patterson and Al-Noor Ramji, who between them bought over 1/2 million shares at 89p (source: London Stock Exchange)

Warning bells ring as soon as I see this number of directors buying shares all at the same time.

So a close look at the BT Group Annual report 2009 (May 13) reveals the reason as follows:

Page 58: ‘All executive directors and members of the Operating Committee will, immediately after payment, use their annual cash bonus for 2008/2009, after tax, to purcahse shares in the company’.

Page 60: ‘The CEO is required to build up a shareholding of 2x salary and the remaining directors 1.5x salary.’

Looking at the declared cash bonus for Livingstone of 343,000 pounds, netting of 40% tax, gives around 200,000 pounds. Livingstone bought 224,000 shares at 89p on June 1st.

We thoroughly support this requirement to purchase shares, as it aligns the Executive members of the Board and the Operating Committee with shoreholders, but it means that for ‘signals’ generated by directors dealings we need to look at activity by non execs.

Sir Michael Rake, the non executive Chairman, has been buying shares. He bought 12,000 at 166p in September, 20,000 at 127p in November, and 28,000 at 72p in March.

These purchases are relatively small, and have not (yet) been reinforced by activity by other non execs.

Further buying activity by other non execs would send a positive signal.

View on BT Group: Neutral (no signal from directors dealing activity).

See other comments by followthedirectors on BT Group here.

Take a look at this article on the Pragmatic Capitalist, which indicates that Insider sales in the US over the last two weeks outnumber buys by about 30:1: ‘Despite “greenshoots” insider sales spike’.

We observed significant share selling by directors in the UK in April: ‘Directors share sales outnumber buys- is the market expensive?’

Add to Technorati Favorites

Prefer to get emails? Click here

RSS Find us on twitter.com/directorsdeals

  • An error has occurred; the feed is probably down. Try again later.

twitter

June 2009
M T W T F S S
1234567
891011121314
15161718192021
22232425262728
2930  

twitter