Terry Smith, Chief Executive Officer, bought 50,000 shares in his own FEET....
Well, I'm glad he has confidence in his own feet. I always thought we were 100% shareholders in our own feet.
Puns aside, serious face on
The age-old problem that many people forget with watching directors dealings is you never know the all-important WHY.
Suggest you do a plot of insider buys in FEET vs price. There is not always a correlation in timing between buys and price increasing.
He may simply be a subscriber to the old adage "I'd rather loose my own money than pay someone else to do it".
He may also deem it easier to buy holdings in his own fund rather than scour the market looking for stuff to invest in (why double up the day job ?)
He may also be making a call on the general "emerging equities" macro theme rather than specifically his fund (and see above why buying his fund might be an obvious way for him to gain exposure)
Plus, for those working in the industry, the compliance bureaucracy around PA dealing may well mean its (slightly) less hassle for a fund manager to buy his own fund than it is to buy some random third-party shares, becuase at least his compliance department will have full visibility into his actions from all angles.
Also bear in mind that he already held 500,000 shares, so he's only increasing his existing holding 10%. And that an extra 50,000 is only 0.18% of shares outstanding. And that the fund itself has an average volume somwhere in the 20-30k region. And individuals and insiders only account for 10% of shares outstanding. And that Terry only ranks number 3 in that list.
If you wanted to dive deeper than that, you could look at the institutional ownership (not only institutions but of course brokers holding in nominee accounts on behalf of clients):
125 Total positions held (19.8m shares)
5 new positions (91k shares)
46 increased positions (632k shares)
33 decreased positions (-519k shares)
6 sold out positions (-96k shares)
So as you can see, Terry's 50k is a bit of a drop in the ocean of an average quarter's broader buy/sell activity.
In summary ? Don't dive feet first into directors dealings.
(or the institutional ownership. in reality, your first port of call for funds (beyond costs and methodology) should be the fundamentals of "what it does and what it invests in and if the aforementioned are suitable for you and your appetite for risk", then after that you can look at "colouring" your judgement with more subjective matters should you be so inclined)
Last Edit: Feb 19, 2019 22:51:14 GMT by wallstreet