Directors of JSE-listed ICT companies are buying up shares in their own companies in what is seen as a show of faith in the stock and future performance of the businesses.
In the past month, transactions worth millions have been announced on the Stock Exchange News Service, as directors of companies such as Net1 and ConvergeNet buy up stakes. IT stocks took a beating during the recent global recession, as investors put their money into shares that were seen as more robust, such as retail.
Net1 director Christopher Seabrooke indirectly spent R8.475 million yesterday to acquire 100 000 Net1 shares. The deal was completed through a trust related to Seabrooke, and he does not gain any benefit through the shares.
Metrofile CEO Graham Wackrill bought 10 000 shares in the company for a total amount of R17 600. Blue Label's CFO and FD also invested in the company in the past month. FD David Rivkind spent R1.85 million on 268 331 shares, while CFO Dean Suntup bought 216 648 shares, for R1.5 million.
ConvergeNet directors have also invested in the company after indirectly buying up shares. Directors Ben Kekena, Tim Modise and Hanno van Dyk collectively bought 120 000 shares in ConvergeNet, through Yellow Star Group Holdings.
Yellow Star Group Holdings is owned by Modise, Kekane and Van Dyk, and initially sold a majority stake in Sizwe to ConvergeNet three years ago. Van Dyk bought 22 170 shares for a total amount of almost R5 000 through Yellow Star.
Modise's purchase of about 30 000 shares, through the group, is worth R6 645, while Kekana bought up 45 600 shares at a value of R10 100.
Selling out?
While several MTN subsidiary directors exercised share options in the past month, other directors have sold down their stakes.
Outgoing CEO Phuthuma Nhleko sold more than three million MTN shares on 17 November, raking in R424 million to “settle his obligations arising from the early termination of transaction conclude with commercial bank [sic]”.
Karel Pienaar, MTN SA MD, also sold several shares. He sold 122 000 shares on 2 November, for a total value of R15.5 million on the open market. MTN director Paul Norman sold just over 100 000 shares, at a total value of R13 million.
Huge Group chairman Stephen Tredoux sold just over R50 000 worth of Huge shares on the open market earlier this month, after selling 50 200 shares at prices of R1 and R1.10.
Gawie Erasmus, CEO of SilverBridge subsidiary SDT, sold almost R200 000 worth of SilverBridge shares in two tranches, at the beginning of the month. The sale, which directly benefited him, was on the open market.
Erasmus also sold 100 000 shares on 22 November on the open market. The shares were sold at R1.70, making the deal worth R170 000. Jasco CFO Warren Prinsloo sold a total of almost 25 000 shares for a total value of R31 000.
A time to buy?
Irnest Kaplan, MD of Kaplan Equity Analysts, says the dealings could indicate that directors are reassessing their portfolios as the year draws to a close. He adds the dealings are company-specific, such as the sales at MTN by departing directors.
While it is difficult to pinpoint why directors would sell shares, buying up stock is a show of faith in a company and indicates that the directors believe in the future of the stock, says Kaplan.
Chris Gilmour, Absa Investments analyst, doubts the sales are linked to a need for cash as the festive season gets under way. “It's coincidence, pure and simple.”
Gilmour says while a large amount of dealings have taken place in the past month, there have been no events to indicate an adverse reason for directors to sell.
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