It's very interesting when directors of an S&P/ASX 200 Index (ASX: XJO) share decide to buy shares of their own company. Can investors take this as an investing prompt?
There are a number of stated reasons why directors may decide to sell their shares, whether the announced reason is the real reason or not. Paying tax and buying a property are two often-used reasons.
But, there may only be one reason for buying – they think it's good value.
Which directors have bought ASX 200 shares?
The Millner family have been involved with the investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and they have increased their financial investment to the tune of millions of dollars.
Rob Millner is the current chair of Soul Pattinson. Between 17 October to 19 October 2022, it was announced that entities he's involved with had bought 80,000 shares, spending almost $2.19 million.
But another announcement today showed that entities involved with Millner had bought another 70,000 Soul Pattinson shares at the end of last week and spent around $1.9 million on them.
Tom Millner, the son of Rob Millner, also made the same investment announcements as he's involved with the same entities.
Wealth tied up in Soul Pattinson shares
For most people, spending around $4 million on shares would be a major move.
But the Millners have large amounts of their wealth tied up in shares.
Rob Millner's disclosure showed that he now has a total interest in 22.83 million shares. That's close to around $630 million at the current Soul Pattinson share price.
Tom Millner's disclosure revealed that his total interest is now 21.98 million shares. That's worth around $605 million.
So, despite having an enormous amount of their wealth already tied up in the investment conglomerate, both thought that the company's current situation was worth investing in.
Investment follows outperformance in FY22 result
These investments by the Millner family come after last month's Soul Patt's report for the 12 months ending 31 July 2022.
The company's net asset value (NAV), pre-tax, outperformed the All Ordinaries Index (ASX: XAO) by 20.2% in FY22. As well, its net cash flow from investments on a per-share basis increased 28% compared to FY21. It also grew the total ordinary dividend by 16.1% to 72 cents per share.
Soul Pattinson also declared a special dividend of 15 cents per share on the back of the bigger dividends it was receiving from New Hope Corporation Limited (ASX: NHC).
In terms of "managing risk", Soul Patts said that it's using active portfolio management to enhance returns and manage risk. It has increased diversification while increasing liquidity to take advantage of new opportunities, the company said.
