There's a bit more nuance to directors' share dealings, where buying shares=good, and selling stock=bad, isn't always the case
Directors’ dealings are a hot topic. If they’re selling, everybody panics and shouts insider trading, and if they’re buying everybody gets excited. But for listed companies the whole process is a lot more nuanced and I want to dig into some of the details this week.As per the JSE listing rules any director has to notify the market whenever they buy or sell shares in the company within three days.
They also need permission from the company secretary in order to trade. This is to ensure no insider information is traded upon. Lastly, directors will have closed periods around results time during which they cannot trade in the company shares as, through the process of putting together the results they will be privy to insider information that the general market isn’t, until the results are released.Now let’s get into the part investors love: directors buying.
The real uproar happens when a director sells. Often this is considered an indication that a stock is expensive , or that there is trouble afoot.Yet, ultimately, directors are net sellers in company stock as they receive stock as bonuses and even at times for base pay. In other words, they have a lot of stock and will usually be very overweight their own shares, so it really is prudent for them to lighten their holding for simple diversification purposes.
South Africa Latest News, South Africa Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
ICM Files: Meet the company directors who helped the Guptas capture SAThis is the third piece in a series on a company called Integrated Capital Management and its directors, who enabled and benefited from State Capture at Transnet, but have yet to be held to account.
Read more »
Simon Tiemtoré finally signs huge Oragroup-Vista Bank dealThe Vista Group – the holding company for the VistaBank network founded by Simon Tiemtoré – is set to become the majority shareholder in the Lomé-based banking group with a 61% stake.
Read more »
Simon Tiemtoré finally signs huge Oragroup-Vista Bank deal - The Africa Report.comPan-African private equity investor Emerging Capital Partners ECP has signed an agreement to sell its entire stake in Oragroup to Vista Bank, ending the long takeover saga of the commercial banking group.
Read more »
'No greater feeling': Netizens share thoughts on throwback video of The RockDwayne 'The Rock' Johnson throwback video had the internet gushing over his relationship with his late father. He was 11 years old when he watched him wrestle.
Read more »
Gigi Lamayne mourns passing of her ‘forever babe’ Liberty ‘YBK Vision’ MhlangaThe ‘Mashonisa’ songstress took to Instagram to share the tragic news with her followers.
Read more »