$1.1b worth of GK shares traded
GRACEKENNEDY SHARES valued at more than $1.1 billion traded on Friday, which represented the biggest day in years for the stock.
The transaction comes just over a month into a three-way split of the stock to improve its liquidity.
Few shareholders hold enough shares to transact volumes of 27.9 million units. The largest shareholders of the food and financial services conglomerate comprise a mix of institutional investors, including pension funds, and individuals.
Sources say that Sagicor Investments Jamaica Limited acted as the broker to the deal, but the buyer or buyers were unknown up to print. Neither Sagicor nor GraceKennedy responded to requests for comment.
GraceKennedy will pay a dividend of 34 cents on Monday. The distribution — amounting to just under $9.5 million — will go to the former owner or owners of the 27.9 million units as the transaction occurred more than a week after the ex-dividend and record dates.
The GK stock gained 22 cents on Friday to close at $41.67. It traded at $42.49 on Tuesday after shedding 47 cents of Monday’s gains. The conglomerate’s market capitalisation now stands at $42.3 billion.
The last time investors transacted even a third of Friday’s 27.9 million volume was back in November 2014 when roughly 9.5 million units traded at $60 per share.
In August, the company effected a three-for-one stock split, raising its issued shares to 994.88 million units and authorised share capital to 1.2 billion units.
The holdings of the top shareholders prior to the stock split included NCB Insurance Co Limited a/c WT109, 18.13 million shares; GraceKennedy Limited Pension Scheme, 14.9 million; Sagicor Pooled Equity Fund, 14.47 million; National Insurance Fund, 13.9 million; Xaymaca Limited, 9.06 million; ATL Pension Fund Trustees Nominee Limited, 8.47 million; FCIB (Barbados) Limited a/c 1191, 7.6 million; Douglas Orane with 6.8 million shares; Michele Marie Kennedy, 6.6 million; and FredKenn Limited with 5.6 million.
Those holdings would have tripled since August, and should be reflected in disclosures once GraceKennedy files its third a quarter financial report.
The stock virtually doubled in price in a year from $64 at September 2015 to over just under $128 in August just prior to the split. Investor demand in the stock rose after GK released solid earnings reports in the first and second quarters. The stock has kept largely stable following the split.
The conglomerated, headed by CEO Don Wehby, made $2.7 billion net profit over six months ending June 2016, or 80 per cent higher when compared to $1.5 billion a year earlier. lobbying for the removal of the tax for more than two years.
“It (the tax) was putting a lot of strain on the farmers,” Brown said, even while acknowledging that the removal was not yet a done deal.
Pig farmers typically import furrowing crates, flooring, heat lamps and other implements that mostly relate to the building aspect of the operations. At roughly US$1,600 per furrowing unit, a farmer will likely save at least US$260 on each unit, Brown reasoned.
“It was hampering a lot of farmers to modernise as fast as we would want to,” he said.
“When you import US$30,000 worth of equipment and when you add 16.5 per cent (GCT) to that, coupled with devaluation, it was coming out very expensive,” the pig farmer said.
Egg farmer Roy Baker, who also heads the Jamaica Egg Farmers Association, is hopeful the talks will also include removal of the tax from the shelf price of their products.
Egg farmers import packaging material, which accounts for roughly eight per cent of input costs, Baker said.
“The tax on table eggs stifles the production and the tax to consumers slows the consumption of eggs,” Baker said. “As a result, the farm itself cannot do the output because we are paying GCT on the input and output,” he said.
Himself a large producer, Baker said he spends roughly $3 million per annum on imports of packaging for eggs. The removal of GCT will see those savings invested in the business to boost production, he said.