Tony Carter doubled his stake in Vector on Monday. Photo / Doug Sherring
Tony Carter doubled his stake in Vector on Monday. Photo / Doug Sherring
Company directors are looking through volatile share prices and buying shares on-market in their post-earnings window.
The end of the local earnings season coincided with the S&P/NZX50 Index shedding 8 percent in the final six days of February as covid-19 became a truly global outbreak.
At the bottom of thistrough, directors at Vector, Mercury NZ and the chair of Comvita all bought shares on-market as the two-month trading 'black-out' lifted, permitting them to trade shares again.
Mark Lister, head of private wealth research at Craigs Investment Partners, said it is always comforting for investors to see insiders buying shares, but not unusual.
"I'd take that as a good thing, seeing directors put their money where their mouth is," he said.
Tony Carter, who re-joined Vector's board last year after an eight-year absence, doubled his stake in the electricity and gas distributor after he bought 10,000 shares at $3.16 on Monday. The shares ended the day at $3.18, their lowest close in almost two years.
Carter told BusinessDesk he liked to own shares in companies he's involved in and that the purchase was solely because the trading black-out had lifted. Vector reported flat first-half earnings on February 25.
"It is unrelated to any movement in the share price, it is just related to the window being open. Directors have very limited periods where they can buy shares," he said.
"If the shares had gone up, I still would've bought them."
How long it might take for the downturn to pass is an open question - Carter said he was no better positioned to answer that than anyone else, but that his trade wasn't buying the dip.
"There is a process to buy shares in a publicly listed company. You have to seek the consent of the company and that takes a few days," he said. Vector shares have since risen to $3.35.
Comvita chair Brett Hewlett said his trade wasn't related to market movements and was simply the first opportunity to buy shares. Photograph / John Borren
Comvita chair Brett Hewlett bought 4,500 shares on February 28, the day after the company's self-described "terrible result", where it reported a loss of almost $13 million and announced a raft of changes to its business plan.
Hewlett said his trade wasn't related to market movements and was simply the first opportunity to buy shares.
"Nothing more in it than it being the first trading window we've had," he said.
However, Hewlett said the new business plan and leadership team was creating more optimism about the company's future.
"I think there is a lot of confidence internally and externally around what the company is capable of doing to get back to its profit-making days."
Comvita's share price had already been under pressure but edged slightly higher following the result. It has since fallen to an eight-and-a-half year low $2.17. They were recently at $2.20.
Mercury NZ director Scott St John bought 5,000 shares in the firm on March 2 for $4.58 – the lowest point of its recent 14 per cent slide. The price has since risen to $4.89.
St John said he'd prefer not to comment but noted - like the others - his trade was shortly after the black-out period was lifted.
Mercury reported a 15 percent drop in first-half operating earnings on February 28 and trimmed its full year guidance by $10 million due to dry weather conditions.
