ZSE remains investment of choice

THERE is general consensus that the Zimbabwe Stock Exchange (ZSE) is a preferred hedge against a depreciating Zimbabwe dollar for local investors.

This has resulted in a protracted rally in recent months. However, one indisputable fact of capital markets is volatility.

Perfect timing to buy and sell on the market is near impossible, but good investors know how to take a hint.

A recent accompanying trend on the local bourse is that of directors purchasing shares in their own companies.

It’s a classic case of putting your money where your mouth is.

A case in point: Financial services provider FBC Holdings was the top riser last week, up 81 percent. And over the past two weeks, the company’s share price is up by 298 percent.

Coincidentally (or not) this development came as directors, CEO John Mushayavanhu and deputy Trynos Kufazvinei upped their stake in the company over the same period.

On June 4, FBC chief executive Mushayavanhu — through Tirent Investments (Private) Limited — purchased 1 925 000 shares in the company for $4 427 500.

Mr Mushayavanhu has an indirect beneficial interest in Tirent Investments (Private) Limited. Following the transaction, the CEO now has a holding of 42 325 000 shares in FBC Holdings.

Kufazvinei bought 1 million shares worth $1 410 000 on 18 May, then 5 783 077 shares worth $9 831 230.90 on May 22.

And on June 4, he purchased — through Dinkrain Investments (Private) Limited — 1 069 000 shares to the tune of $2 458 700.

The executive director has an indirect beneficial interest in Dinkrain Investments.

And following the transaction Kufazvinei has a holding of 22 247 047 shares in the company.

It is quite permissible for company directors to purchase and sell stock in the company. But these ‘insiders’ are required to disclose their trading activities, and not trade on inside information (although that’s a slippery slope).

Market watchers and some investors tend to use director deals as a tell-tale sign of a company’s stock prospects.

Director deals have been a common trend of the ZSE over the past couple of months, coinciding with one of the biggest ZSE rallies in years.

Recently Diaribord Holdings’ CEO and finance director also bought shares in that company, while Innscor co-founder Zinona (Zed) Koudounaris also bought shares in the group.

Financial services provider CBZ Holdings’ share has rallied and is now second by market capitalisation.

Word on the market is that major shareholders and directors are on the market for its stock.

Buying shares in companies that they oversee? It could be a sign these directors are seeing good value.