Warren Buffet, a renowned investor, has given a famous phrase “skin in the game”, which refers to a situation under which a high-ranking insider within an organisation buy the shares of the company they are running with his/her own money. The word skin in the above phrase could be a figure of speech for the person or money involved, and the terminology game is used for any action on the field of play.
In an organisation, high ranking insiders are the directors, who lead a particular segment of the company. Director is someone who is elected or appointed for managing the business as well as affairs of the company. A director is engaged in determining and implementing policies along with decision making. He/ she is responsible to prepare and file statutory records with the Companies Office or other agencies, call meetings, handle and keep records, and support the organisation in binding agreements with suppliers, lenders, companies, among other duties.
In short, Directors are more closely associated with the company, and they have an idea about how the business would perform in the future.
Director’s interest in simple terms refers to the involvement of the person in a transaction with the firm in which he/she is a director. The interest could be direct or indirect and must be disclosed to the shareholders as well as to the other directors.
In Australia, under section 205G(1) of the Corporations Act, every director of a public listed company is required to notify the relevant market operator of the director’s relevant interests in securities of the company or a related body corporate, and the contracts to which the director is a party or is entitled to a benefit.
Why Tracking Director’s Interest is Important From Investment Point Of View?
As highlighted above, directors are more closely associated with the company, with access to key company information and idea as to how the business would perform in the future. Holding an interest in the company’s shares, he/she could buy or even sell the company’s shares, considering the business prospect.
Director’s interest in a company acts as the first screen for a good investment. If the director’s interest increases in the company, it is good news, giving confidence to investors regarding the company’s growth potential. On the other hand, if the directors of the company start selling their shares, it is often an alarming situation. But there could also be an instance where the director needs funds to meet his/her financial needs.
In this article, we are discussing the recent director’s interest announcements by six tech stocks listed on the ASX.
Xero Limited (ASX: XRO)
Xero Limited (ASX: XRO), a provider of online accounting software for small businesses, on 12 November 2019, released an announcement related to change of director’s interest.
One of the company’s directors, Andrew Craig Winkler, who holds an indirect interest in Xero’s ordinary shares, disposed of 3 million shares for $225 million, representing sale price of $75 for each share. Total securities held after disposing these shares stood at 9,275,990.
Appen Limited (ASX: APX)
Appen Limited, a global leader engaged in the development of superior, human-annotated data sets for machine learning and artificial intelligence, on 12 June 2019, released an announcement, stating that its CEO and Managing Director, Mark Brayan sold 100,000 APX shares to satisfy tax obligations as well as to diversify personal investments. Post selling these shares, Mark holds 404,414 shares in the company directly and indirectly. He also has 442,583 performance rights available, subject to meeting vesting criteria.
On 18 June 2019, APX updated the market that Bill Pulver, one of the company’s directors, holding an indirect interest in the company’s shares, disposed 392,819 shares at $27.513 each share. Post disposing these shares, he holds 607,384 securities in APX.
Afterpay Touch Group Limited (ASX: APT)
Payment technology company, Afterpay Touch Group Limited (ASX: APT) reported a significant change in the substantial holding of its directors post receiving a notice from AUSTRAC on 12 June 2019 evening. To know more about AUSTRAC and its progress, CLICK HERE.
As per the market release on 18 June 2019, Director Nicholas Molnar, who had acquired 574 ordinary shares under the SPP at $16.96 per share in September 2018, disposed 2,050,000 ordinary shares at $23.00 per share, with the change effective from 12 June 2019. As a result, he holds 20,450,574 ordinary shares and has an 8.09% voting power.
Another Director, Mr Anthony Eisen, who had acquired 574 ordinary shares under the SPP at $16.96 per share in September 2018, disposed 2,050,000 ordinary shares at $23.00 per share. Now, he holds 20,450,574 ordinary shares and has an 8.09% voting power.
WiseTech Global Limited (ASX: WTC)
WiseTech Global Limited (ASX: WTC), a provider of software solutions to the logistics industry, globally, released a final director’s interest notice on 18 October 2019, highlighting that Christine Holman ceased to be a director from 18 October 2019 following his intention to retire. As a result, he doesn’t hold any shares of the company.
On 8 October 2019, WTC announced that Director, Michael Gregg, holding direct as well as indirect interest in the company’s ordinary shares, acquired 4,254 shares at $34.90 per share. Earlier he had a direct interest in 6,236,707 ordinary shares and indirect interest in 7,614,031 ordinary shares. Post acquiring 4,254 shares, he holds a direct interest in 6,236,707 shares and indirect interest in 7,618,285 shares.
Altium Limited (ASX: ALU)
Altium Limited (ASX: ALU), a provider of PCB design software, recently on 30 October 2019 released an announcement related to change in the director’s interest.
Director Samuel Weiss, who has a direct interest in the securities of the company, acquired 1,000 fully paid ordinary shares at US$23,340 which includes the brokerage as well. He now has 1,901,207 securities after the change.
Nearmap Ltd (ASX: NEA)
Nearmap Ltd (ASX: NEA), a provider of geospatial map technology, on 8 November 2019, notified that Mitsubishi UFJ Financial Group, Inc. ceased to be a substantial holder of NEA, effective from 5 November 2019. According to a company announcement on 31 October 2019, Mitsubishi UFJ Financial Group, Inc. had bought 23,280,230 fully paid ordinary shares, translating into a 5.16% voting power.
On 23 October 2019, the company updated the market that Director Ross Norgard, holding direct as well as indirect interest in the company’s shares, disposed of 2 million fully paid ordinary shares. He transferred 1,000k shares from Longfellow Nominees Pty Ltd to Mrs Jennifer Lee Norgard in her personal capacity as per the order of the Family Court of Western Australia. Another 1,000,000 were moved pursuant to a loan service with the loan amount equal estimated to be up to ~ $1.9 million.
Post the change, he now has a direct interest in 1,040,000 fully paid ordinary shares, and an indirect interest in 45,036,295 fully paid ordinary shares.
Below table illustrates the stock performance of the companies discussed above, as on 13 November 2019.
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