Hedging and shipping
Grindrod director rather pessimistic on the share’s future
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