Hedg­ing and ship­ping

Grindrod di­rec­tor rather pes­simistic on the share’s fu­ture

Finweek English Edition - - Companies & Markets - SIKONATHI MANTSHANTSHA

DIREC­TORS OF JSE LISTED com­pa­nies again greeted the past week on the JSE with si­lence, with only 30 trans­ac­tions hav­ing been re­ported, ac­count­ing for a to­tal R55m. And the num­ber wasn’t nec­es­sar­ily made up of trades in ac­tual shares but rather an in­crease in hedg­ing ac­tiv­i­ties by some direc­tors. Had it not been for the hedges by construction com­pany Hu­daco In­dus­tries’ fi­nance di­rec­tor Peter Poole and ship­ping com­pany Grindrod’s Phillip Lund­wall, the value of direc­tors’ trades would have halved to R28m.

Poole took a put and call op­tion on 100 000 shares at the price of R76,50/share (put) and R107,87 on the call side, which ex­pire in Oc­to­ber 2010.

Lund­wall did the same on 200 000 of his Grindrod shares at the price range of 2000c/ share on the put side and 2290c/share on the call side, which ex­pires in Septem­ber 2010.

What the hedges mean is that the direc­tors would be pro­tected on the down­side, as their re­spec­tive coun­ter­par­ties have agreed to buy from them should the shares fall through the floor (put) while they them­selves would part with any­thing higher than the call price. That im­plies they’d be happy with the re­spec­tive prices of their shares stay­ing in the spec­i­fied price ranges for the du­ra­tion of their op­tions.

While Poole’s hedge re­flects con­fi­dence and op­ti­mism on the construction com­pany’s prospects, the same can’t be said about Lund­wall, a di­rec­tor of one of Grindrod’s sub­sidiaries. The put price of Poole’s hedge is higher than Hu­daco’s shares have traded since Jan­uary 2007, while it’s never traded near the call price of R107,87 – R91 is the high­est Hu­daco has ever achieved.

How­ever, Grindrod’s price has hit highs of 2900c/share as re­cently as April and has traded above the floor price of the op­tion since May 2007 – only break­ing through the 2200c/share floor level dur­ing times of cri­sis in the over­all mar­ket. It there­fore seems Lund­wall is rather pes­simistic about the ship­ping in­dus­try over the next year or so.

Sa­sol ex­ec­u­tive di­rec­tor Nolitha Fakude spent more than R500 000 on the en­ergy gi­ant’s shares last week. The group strat­egy and trans­for­ma­tion di­rec­tor was mak­ing up for the op­por­tu­nity she lost in the Sa­sol In­zalo empowerment trans­ac­tion, when she made way for other pre­vi­ously dis­ad­van­taged South Africans by with­draw­ing her par­tic­i­pa­tion in the hugely over­sub­scribed scheme.

We couldn’t reach Fakude to share her thoughts with Fin­week read­ers on how much more she in­tends buy­ing, while a less than friendly per­sonal as­sis­tant in Sa­sol CE Pat Davies’s of­fice plainly re­fused to fa­cil­i­tate any com­mu­ni­ca­tion with ei­ther of them be­cause they were “out trav­el­ling”.

Else­where, pri­vate eq­uity fund Lereko Metier Growth Fund has struck again in tim­ber and forestry com­pany York shares with a R1m buy. The 60 000 shares (at 1780c/share) would help lift Lereko Metier’s stake in the com­pany to more than 20%, as the fund’s been a con­sis­tent buyer since early this year. Chair­man Lance Cooper wouldn’t be out­done: he spent R120 000 on 6 575 shares.

An­other con­sis­tent buyer – Arnold Gold­stone, of en­gi­neer­ing and agri­cul­tural com­po­nents com­pany In­victa – did the op­po­site last week with a sale of 245 000 shares to three of his col­leagues. Gold­stone didn’t re­turn mes­sages left for him at his of­fice.

Mak­ing up for lost op­por­tu­nity. Nolitha Fakude

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