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The Burke and Baird show

There are bigger transactions in the directors’ dealings table this week. However, it might be more instructive – in terms of drawing investment pointers – to concentrate on trades in two of the JSE’s smaller companies. At the outset it may be difficult to make sense of directors trading in promising electrical wholesaler ARB Holdings, with one director selling around R3m worth of shares and another buying roughly the same amount.

On 14 April, ARB non-executive chairman Alan Burke bought around 1,9m shares at 310c each, while fellow director (and empowerment partner) Jacob Modise sold around 1,9m shares at the same price. Considering such trades have to be cleared by the board, we might imagine a conversation: “I say, Jacob my friend, if you’re selling your shares, I’ll take them up.”

Since Burke actually bought 100 000 ARB shares at 318c each a few days earlier, maybe the conversation went like this: “Hey, Al, if you’re looking for a bigger line of ARB stock…”

Modise, who controls Batsomi Investments (ARB’s empowerment partner), may well have valid reasons to cash in some of his holding. But Finweek reckons Burke is doing pretty well topping up his holding in ARB. The company’s interim results were not only operationally sound but were backed up by reassuring cash flows. In fact, ARB’s bank balance looks like being able to accommodate a generous year-end dividend – provided operations keep ticking over and there’s no compelling corporate action to pursue.

Another noteworthy transaction – albeit worth petty cash – was Consolidated Infrastructure Group (CIG) chairman Peter Baird buying 30 000 shares at 82c each. For the past eight months Baird has been regularly accumulating small parcels of CIG shares (which some readers might remember as Buildworks). Baird also seems happy to acquire shares ahead of CIG’s proposed consolidation of its issued shares on a 10-for-one basis. Market lore would suggest consolidation exercises – unlike share splits – initially cause price pressure (see recent consolidations, such as Ububele and Tradehold).

Clearly, Baird isn’t worried – and why should he be? CIG looks a more than capable contender, even if the market hasn’t yet woken up to that fact.
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