Melnick remains hawkish
THE MERE NAME of financial services group Peregrine obviously lends itself to comparisons and puns related to birds of prey and we’re sure that chairman Sean Melnick intended it to be that way when he established the company.
Thus we note that Melnick expressed a hawkish sentiment towards the group last week as he switched a portion of his direct stake in the group into single stock futures.
Switching into single stock futures is also a very efficient way of extracting cash from a shareholding without diminishing your exposure to the stock. That’s because single stock futures are highly leveraged instruments that require the buyer only to put up a fraction of the face value of the underlying stock, typically around 10%.
In other words, if you sell stock for R30m (or just under in Melnick’s case) you would only need to pay a margin of around R3m to maintain the same economic exposure to the stock. In so doing you have neatly extracted R27m.
Of course, futures only have a limited life and you’d have to keep rolling the future over at each expiry date to maintain your exposure to the stock. Closing out the position would effectively be a sale of the stock.
Another substantial trade last week came from Truworths deputy MD Tony Taylor, who sold stock worth R13,1m.
It was stock that Taylor bought when he previously exercised options. Truworths’ share incentive scheme rules provide for a loan to be advanced to buy shares on exercise of options and, if a participant avails himself or herself of that facility, the shares are pledged as security for the loan and regarded as being held in terms of the scheme.
Finally, we note that while Massmart CEO Mark Lamberti has been selling off the larger part of his holdings in the retail giant ahead of his retirement in June, group chairman Christopher Seabrooke has been a consistent buyer over the past six months. Seabrooke has spent a shade under R20m on Massmart since September 2006, effectively doubling his stake in the group.
Seabrooke has been a director of more than 20 JSE-listed companies over his working life. He’s currently CEO of Sabvest, chairman of Metrofile Holdings and Set Point Technology and a director of Datatec, Primedia and Nasdaq-listed Net1 UEPS Technologies.
He’s a director of a number of unlisted companies overseas and in SA, including SA Bias Industries and Mineworkers’ Investment Company. He’s a former chairman of the South African State Theatre and a former deputy chairman of the inaugural National Arts Council.