Of Bulls & Bears

Friday 28th April 2000

Directors buy, institutions sell

Some investors believe institutional shareholders, executives and directors are better placed than most to understand what is going on in a company, so their sales and purchases of shares are watched with interest. What then are small shareholders to make from the Goodman Fielder share register, which shows 20 of the 38 largest investors in the company have reduced their stakes since November? Most of the sellers are Australian institutions which have cut their holdings by several per cent. The good news is directors have not sold shares and, thanks to a new programme put in place last year, are required to invest 25% of their fees in Goodman shares. Unlike shareholders, they are unable to vote with their feet and their combined holdings have risen from 311,000 to 458,000. Perhaps this regime is designed to concentrate their minds on improving the food group's share price, which is down by a quarter on its yearly high.

PDL another family firm

Following Ferdinand's comments a few weeks ago about the number of Gibbons family members represented at the top of The Colonial Motor Co share register, he has noticed a similar pattern with Christchurch-based manufacturing company PDL Holdings. Of the 10 largest shareholders, no fewer than seven bear the surname of company founder Sir Robertson Stewart (in fact three of them are either him or his interests). The combined holdings of these seven holders is 7.5 million shares, representing a controlling 55% stake in the company, and is worth around $35 million. This is a nice sum but well short of the $61 million the shares were worth at their peak in late 1997. Ferdinand hopes relations between the family members are cordial given rifts in the Gibbons clan allowed Sir Ronald Brierley's Guinness Peat Group to grab control of Colonial Motor Co a few years ago.

Brunei beckons for oil drillers

Fletcher Challenge Energy has begun drilling off the coast of Brunei in what it describes as "the biggest offshore exploration drilling programme in Brunei for a decade." Ferdinand can't help but wonder if the drilling crews going to that part of Asia know what they are in for. Assuming they get shore leave in the tiny oil-rich sultanate, the notoriously hard working, hard partying oilrig workers might find conditions slightly different from Taranaki. As a guidebook describes it, "Brunei is a little slice of Islamic heaven. Alcohol is virtually unobtainable, there's no nightlife to speak of and the political culture encourages quiet acquiescence to the edicts of the sultan."

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