Post-earnings season is a typical time of year when we see directors buying or selling shares they personally own in their companies.
This is because ASX listing rules that guide companies on when they should allow key management personnel (KMP) to trade suggest the period after the release of results is a good time. And the period before is not.
This is because key insiders know a lot more information about the company's health than we ordinary investors in the period before important results like half-year and full-year reports are released.
This knowledge gives them an advantage over us, so it's not fair for them to trade during this time.
That's what insider trading is all about, and why it's illegal.
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Why ASX directors have to report their trades
When a company director buys or sells ASX shares in the business they help run, they have to disclose their trading activity publicly via a 'Change of Director's Interest Notice' to the ASX. They have to do it within five days of the trade.
These rules are in place for the obvious benefits of transparency. Knowing that directors have 'skin in the game' gives investors greater confidence that the managers' personal interests align with shareholders.
When a key director sells a large parcel of ASX shares, investors may take this as a bad sign. This is why many companies issue formal statements explaining large transactions alongside the required notices.
With all that said, here are some examples of the biggest director trades in ASX shares post-reporting season.
Examples of major director transactions
Champion Iron Ltd (ASX: CIA)
Champion Iron executive chair Michael O'Keeffe sold two million shares for $11.9 million. The company did not issue a statement regarding the sale. However, O'Keeffe remains a 'substantial holder' (which is anyone who owns a 5% or higher position in an ASX share) with an 8.317% stake in the iron ore company.
Pilbara Minerals Ltd (ASX: PLS)
The ASX lithium miner's CEO, Dale Henderson, sold 1.2 million Pilbara Minerals shares through a series of on-market trades between 30 August and 1 September for about $5.76 million. But the company explained the sale was "to fund Mr Henderson's tax obligations arising in relation to the exercise of options and performance rights allocated …".
CSL Limited (ASX: CSL)
CSL chair Dr Brian McNamee AO sold 21,000 CSL shares worth $5.58 million for "philanthropic purposes and to meet personal and taxation obligations", according to the biotherapeutics giant. Non-executive director Andrew Cuthbertson also sold a similar-sized parcel of CSL shares. He sold 20,000 shares "for philanthropic purposes and as part of a reweighting of his personal investment portfolio".
BHP Group Ltd (ASX: BHP)
BHP CEO Mike Henry sold almost $5.2 million worth of shares via an on-market trade on 25 August. But this was offset by his receipt of 248,435 shares via various award plans. As a result, Henry's holding actually rose from 677,218 to 804,761 BHP shares. The award plan shares are taxable, so BHP explained to investors that Henry sold some shares "in order to meet expected tax obligations …".
Santos Ltd (ASX: STO)
Santos CEO Kevin Gallagher sold $4.7 million worth of shares last week. In a statement, Santos said the CEO's sale was "part of a reorganisation of personal financial matters". Gallagher still owns approximately 1.5 million Santos shares and more than three million share rights and restricted shares.
Evolution Mining Ltd (ASX: EVN)
Jacob Klein, the executive chair of ASX gold mining share Evolution, sold 1.25 million shares worth about $4.5 million. But he still owns 15 million shares, which translates to a value of about $56 million.
Aussie Broadband Ltd (ASX: ABB)
The co-founder and managing director of this ASX telco share, Phillip Britt, sold about $3.5 million worth of shares late last month. The company explained that Britt intends to exercise 698,228 options, and the sale was made to fund that, as well as for "personal reasons". Once all this was done, Britt still owned 15.45 million Aussie Broadband shares and remains a substantial holder with a 6.5% stake.
NIB Holdings Limited (ASX: NHF)
CEO Mark Fitzgibbon sold 70,000 NIB shares worth over $500,000 on 31 August and 1 September. The company issued a statement explaining that the sale was "to meet a personal income tax obligation".
APM Human Services International Ltd (ASX: APM)
APM founder and executive chair Megan Wynne recently invested another $2 million in her international health and human services business. She now owns more than 212 million shares. Independent non-executive director Robert Melia also purchased 100,000 extra APM shares worth about $180,000.
IGO Ltd (ASX: IGO)
IGO chair Michael Nossal purchased 20,000 IGO shares worth $276,000. The purchase took Nossal's holding from 55,000 shares to 75,000 shares in the ASX 200 nickel and lithium producer. IGO shares are among the ASX shares that delivered the biggest dividend boosts of the earnings season.
Iress Ltd (ASX: IRE)
Iress independent non-executive director and chair Roger Sharp invested almost $200,000, buying 30,973 extra shares on 31 August. The trade almost doubled Sharp's personal stake in the ASX 200 tech share. And he wasn't the only director buying up more Iress shares, either.
