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Three directors of Rio have invested about GBP 560,000 in RioTinto (RIO, 1925p) shares over the last few days.
On their own, I would see this as a STRONG signal to investors, but as Rio are in the process of asking shareholders to approve the terms of the Chinalco deal, I think these purchases should be taken with a healthy dose of scepticism.
Paul Skinner, Chairman of Rio Tinto, said in a recent press release (February 12th, http://www.riotinto.com):
“Chinalco’s investment is a clear vote of confidence in Rio Tinto’s strength, its growth prospects and the outlook for the commodities we produce.”
To show his personal support for the deal (I believe) Skinner has bought 4000 shares at GBP 19.6955, investing almost GBP 80k (source: London Stock Exchange, date 16/2/09). Put this in the context of Skinners pay as Chairman, GBP 693,000 in 2007 (source: RioTinto annual report 2007).
The other purchases were made by Executive Director Dick Evans, who bought 10,000 ADRs at $114.685 (13/2/09) and Lord Kerr (Non executive director) who bought 4000 shares at GBP 19.38 (16/1/09) (source: London Stock Exchange).
View on RioTinto: Positive
Strength of Signal: WEAK (clouded by company being in the process of a share offer and asset sale)
