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When insiders sell, sell; when they buy, buy


A public ownership report (POR) as of Sept. 30, 2019 listed San Miguel Corp. (SMC) with 904,752,537 treasury shares out of 3,288,649,125 issued shares, leaving the conglomerate with 2,383,896,588 outstanding common shares.

The POR showed two principal stockholders as holding 1,946,724,136 SMC common shares, or 81.65 percent of the total. Top Frontier Investment Holdings Inc. directly owned 1,573,100 SMC common shares, or 65.98 percent; and Privado Holdings Corp., which directly and indirectly held 368,140,516 and 5,483,280 SMC common shares, respectively, for a total of 373,623,796 common shares, or 15.67 percent.

The report also listed the following as holders of SMC common shares: San Miguel Corp.
Retirement Plan — which fell under “affiliates” — with direct and indirect ownership of 45,000 and 2,645,007 common shares, respectively, for a total of 2,690,007 shares, or 0.11 percent; various banks, with direct ownership of 320,951 common shares, or 0.01 percent; and various employees, with direct ownership of 1,950,022 common shares, or 0.08 percent. The 15-person board held 5,352,349 SMC common shares, or 0.21 percent, of which Chairman and Chief Executive Officer Eduardo M. Cojuangco Jr. directly owned 3,828,702 common shares, or 0.16 percent.

Held under lockup were 44,245,054 SMC common shares, or 1.85 percent.

The ownership of 381,534,412 SMC common shares — or 16 percent — which should have been equivalent to 16.0046 of the outstanding, was attributed to public stockholders.

Ownership profile

A general information sheet (GIS) as of June 11, 2019 listed SMC as having a capitalization of P30 billion, which is equivalent to 6 billion shares based on P5 par value. Of SMC’s authorized capital stock, 34,464 Filipinos held 3,784,787,174 shares (98.72 percent), of which 33,130 owned 2,321,429,440 common shares.

The rest are made up of three Filipinos who held 279,406,667 preferred S1 shares; 105 with 90,140,640 preferred S2B shares; 179 with 254,194,990 preferred 2C shares; 164 with 88,909,530 preferred 2D shares; 258 with 133,196,868 preferred 2E shares; 139 with 221,445,888 preferred 2F shares; 237 with 66,256,225 preferred 2G shares; 159 with 162,643,996 preferred 2H shares; and 90 with 167,162,930 preferred 2I shares.

The GIS also listed 1,353 foreigners as holding 71,170,681 shares, of which 1,327 owned 62,467,148 SMC common shares, or 2.62 percent.

Top Frontier Investment is SMC’s top stockholder. It owned 1,573,100,340 common shares, or 40.80 percent.

PCD Nominee Corp. held 163,708,596 SMC common shares and 767,730,278 preferred shares for a total of 931,438,874 shares, or 24.16 percent, as record stockholder for Filipino beneficial owners. Privado Holdings owned 368,140,516 common shares, or 9.55 percent. It also held as record stockholder for Filipino beneficial owners another 41,367,503 common shares and 277,319,602 preferred shares for total ownership of 318,687,105 preferred shares, or 0.26 percent.

As record stockholder for foreigners, PCD Nominee also held 49,944,373 SMC common shares and 8,300,870 preferred shares for a total of 58,245,243 shares, or 1.51 percent.

Due diligencer’s take

It is only fair for insiders to disclose their trades on listed stocks that they represent either as directors or executives. As insiders with knowledge of company events, they are not just exposed to information the public do not know anything about. It is not the question of whether they are engaged in buying or selling the listed common shares issued to them by their own publicly listed companies. The question is: Is it moral?

As has been written here a few times, it is also not right for listed companies to place as principal stockholders when, in fact, they are foreigners. It may be time for the Securities and Exchange Commission to strictly implement the law on ownership.

If foreigners are allowed to own up to a maximum of 40 percent, let this be the rule. Otherwise, it is time to amend the Constitution to allow foreigners maximum ownership of listed stocks up to 100 percent.

It may also be about time for lawmakers to change the provision on foreign ownership of listed companies. If foreigners would be allowed to hold up to 100 percent of outstanding shares, perhaps there would be sudden increase in the number of foreigners who would want to invest in this country.

Why not start with listed stocks? Just asking.

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