Monday, 12 January 2009
2008 Most Active Year for Buyers, Least Active for Sellers Since 2001
2008 was a very challenging year for directors as the market plunged to a five-year low of 1,600 in the fourth quarter, ending the year down by more than 49 per cent to 1,761.56. The steep fall in the market resulted in the most active year for buyers and the least active year for sellers, since 2001.
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2008 Most Active Year for Buyers, Least Active for Sellers Since 2001
By ROBERT HALILI
12 January 2009
2008 was a very challenging year for directors as the market plunged to a five-year low of 1,600 in the fourth quarter, ending the year down by more than 49 per cent to 1,761.56. The steep fall in the market resulted in the most active year for buyers and the least active year for sellers, since 2001. Buyers outweighed sellers significantly last year with 661 directors of 370 listed companies that recorded 3,570 insider purchases worth $742 million, versus 111 board members, 89 firms, 199 disposals, and $177 million. Not surprisingly, directors were net buyers in every month in 2008 with net buy totals of 281 firms, 3,371 trades, 550 directors, and $565 million.
Buyers were the most active from September to October 2008, when share prices reached their lows, with 1,128 acquisitions worth $181 million. The number of purchases during that two-month period was only four trades shy of the acquisitions recorded from April to August 2008. Sellers, on the other hand, were consistently quiet throughout the year with an average of only 11 directors, 11 companies, 17 disposals, and $15 million recorded per month from January to December. The most active month for sellers was in March 2008 with 17 firms that posted 29 disposals worth $51 million. The other months had very low sales with no more than 15 companies that recorded 23 disposals worth $24 million.
Looking at the yearly trade totals since 2001, buyers were significantly more active last year than in the previous seven years. The number of purchases in 2008 was sharply more than the yearly average of 1,545 purchases from 2001 to 2007. The 661 directors who bought shares last year was also nearly double the yearly average of 366 board members from 2001 to 2007. The huge spike in the number of purchases last year, however, did not translate into record turnover due to the sharp fall in share prices. Directors in 2008 acquired only $742 million worth of shares, sharply lower than the $1.6 billion worth of acquisitions in 2007. The buy value last year, however, was sharply higher than the yearly average of $233 million from 2001 to 2006.
On the sales side, the depressed market in 2008 resulted in the lowest insider sales activity in the past eight years. The numbers of directors, companies, transactions, and value in 2008 were sharply lower than the 328 directors, 214 firms, 1,024 disposals, and $780 million in 2007. The sales figures last year were also sharply lower than the yearly averages of 288 directors, 159 companies, 888 trades, and $394 million from 2001 to 2006.
Top traders in 2008
The directors who bought the most shares in 2008 were stretched financially as the continued fall in share prices forced them to buy in almost every month last year. Chairman Charoen Sirivadhanabhakdi of beverage producer Thai Beverage Public Co was the top buyer among all directors last year, with 383 million shares purchased worth $89 million at an average of 23 cents each. The chairman recorded a whopping 100 acquisitions from Jan 14 to Dec 2, 2008, at 20 cents to 27 cents each.
The purchases were hefty as they accounted for more than 20 per cent of the stock’s turnover last year. The consistent and heavy price support have partly paid off as the counter ended only 16 per cent down, from the chairman’s average purchase price to 20 cents in 2008.
The second top buyers last year were chairman Wee Cho Yaw and deputy chairman John Gokongwei Jr of property developer and detergent and toiletry products manufacturer United Industrial Corporation (UIC), with a combined 26 million shares purchased worth $62 million at an average of $2.37 each. The two top board members recorded 38 acquisitions from Jan 9 to Dec 23 at $3.08 to $0.99 each. Their trades also accounted for more than 17 per cent of UIC’s turnover last year. Despite the purchases by these two high-level executives, the stock closed 56 per cent lower than their average purchase price to $1.05 in 2008.
Another stock that ended sharply lower in 2008 despite purchases by four directors was commodities trader Noble Group. Vice-chairman Harindarpal Singh Banga, CEO Richard Samuel Elman, and non-executive directors Kenneth Stuart Courtis and Michel Harouche acquired nearly 27 million shares from March 17 to Sept 30, 2008, worth $50 million, at $2.16 to $1.26 each. Investors should note that the company also bought back 74.6 million shares worth $89 million from September to October last year at $1.65 to $0.67 each. The stock closed 46 per cent down from the directors’ average purchase price of $1.88 each to $1.02 in 2008, but only 14 per cent lower than the group’s average buyback price of $1.19 each.
In terms of sales, the top seller by value in 2008 was non-independent, non-executive director Hsu Pu of mainland confectionery firm Hsu Fu Chi International, with 10 million shares sold worth $12 million. The disposal was well-timed as it was made in the first week of January when the share price was at $1.20. The counter fell to as low as 65 cents in October 2008, before closing 29 per cent lower than the director’s average sale price to 85 cents in 2008.
The second top sellers in terms of value in 2008 were directors of property developer and hotel operator CapitaLand, with three board members who unloaded 1.8 million shares from May 2 to Dec 11, 2008, worth $11.6 million. The disposals were made at progressively lower prices from $7.00 to $2.84 each.
President and CEO Liew Mun Leong accounted for the bulk of the sales, with 1.6 million shares sold in May 2008 at an average of $6.93 each. The CEO also acquired 50,000 shares in November 2008 after the stock fell by 58 per cent from his purchase price to $2.95. The insider sales and purchases were well-timed, as the counter closed 53 per cent down from the directors’ average sale price and higher than Mr. Liew’s purchase price to $3.11 in 2008.
The writer is managing director at Asia Insider Ltd
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