Insiders’ trades

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Emeterio Sd. Perez

SHOULD the public investors do what company insiders do? If members of the board sell, they should also sell, and buy when their fellow stockholders inside the boardroom buy.

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Following are trades of two directors, who may not be principal stockholders. Yet, as members of the board, they are definitely insiders whose stock market transactions may or may not influence their stocks’ prices.

Atlas Mining

On July 7, Gerard Anton S. Ramos, son of businessman Alfredo C. Ramos, sold in four transactions 85,000 Atlas shares. He sold 4,900 shares at P5.12 each; 30,000 shares at P5.16 each; 100 shares at P5.17 each; and 50,000 shares at P5.20 each.

The older Ramos is chairman of the board.

The sale grossed Ramos, the son (who has been a director since July 2007), P440,405. It reduced the Atlas shares he directly owned to 6.186 million from 6.271 million.

An ownership profile listed the following stockholders: SM Investments Corp. (SMIC), 612.191 million Atlas shares, or 29.33 percent; Alakor Corp., 453.963 million shares, or 21.75 percent; and Anglo Philippine Holdings Corp., 174.57 million shares, or 8.36 percent.

PCD Nominee Corp. holds 1.707 billion Atlas shares, or 81.77 percent, only as record stockholder. In a footnote to the ownership filing, Atlas said it “has no information as to the beneficial owners of the shares of stocks held by PCD Nominee Corp. other than SMIC with 512.191 million shares, or 29.33 percent, and Alakor with 453.963 million shares, or 21.75 percent.”

On July 12, Atlas shares opened trading at P5.23, which was also the session’s high. It dropped to a low of P5.15 and closed at P5.21.

In its first-quarter financial report, Atlas reported additional paid-in capital (APIC) of P14.687 billion, which was 7.07 times its outstanding capital of P2.087 billion. The company’s retained earnings based on a consolidated filing amounted to P17.75 billion.

APIC represents the amount paid in excess of the par value of a company’s capital stock.

Waterfront

Renato B. Magadia is chairman of the board of Waterfront Philippines Inc. (WPI), a listed company that belongs to the Gatchalian group of companies.

On July 10, Magadia sold 250,000 shares out of 2.099 million shares he owned in WPI in two trades – 100,000 Waterfront shares at P0.99 each; and 150,000 shares at P1 each.

A public ownership report as of April 17 listed Magadia as holder of 2.985 million WPI shares, or 0.11 percent. Of his total holdings, he directly owned 200 shares.

Ironically, WPI credited the public with 1.312 billion shares, or 52.508 percent. This ownership made them the company’s majority stockholders, meriting them 4.726 seats, which they do not have and will never have.

Instead of the public, WPI’s nine-person board had three independent directors listed on the website of the Philippine Stock Exchange (PSE), namely, Arthur R. Lopez, Sergio R. Ortiz-Luis, and Ruben D. Torres. Aside from Magadia, the company’s regular directors are Kenneth T. Gatchalian, Dee Hua T. Gatchalian, Elvira A. Ting, Reno I. Magadia and Lamberto B. Mercado Jr.

Waterfront reported under equity an accumulated deficit of P620.322 million, a dramatic reduction from the P985.534-million deficit in the same period in 2016. As of Dec. 31, 2016, its deficit amounted to P760.986 million.
On July 12, WPI opened trading at P1.17, peaked at P1.37 and closed the session at P1.32.

Due Diligencer’s take

The sale by two company insiders is not an encouragement for the public to do the same. It is up to them to decide what to do with their holdings in either Atlas or Waterfront and other listed companies.

It was also not the intention of Due Diligencer to suggest any trade decision by the public. This piece was meant to show the trades by insiders, especially if they are members of the board. What do they know that the ordinary investors, who are not privy to anything going on inside the boardroom, do not know?

Incidentally, both Ramos and Magadia complied with the rule on full disclosure of their trades. They can’t be blamed for selling some of the shares they own either directly or indirectly in their companies. As ordinary transactions, their trades may not matter to the more serious investors among the public. How about the Securities and Exchange Commission (SEC)?

As regulatory authority, the SEC still exercises jurisdiction over the PSE even if the latter is a self-regulatory organization. For the sake of the public, commission officials may want to require a more detailed agenda of board meetings and the results of such meetings.

Why deny the public, who may also be stockholders of listed companies, the privilege of reading the minutes of board meetings that would be more informative if not more educational? Just asking.

esdperez@gmail.com

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