Insiders in fundamental stocks on the Nigerian Exchange Limited (NGX) transacted N32.4billion worth of stocks in 2021, data gathered by THISDAY revealed.
The insiders include Managing Directors, Deputy Managing Director, Non-executive Directors, and shareholding firms, among others.
The companies whose directors were involved in the transactions include; Nestle Nigeria Plc, Dangote Cement Plc, Guaranty Trust Holdings Plc (GTCO), FBN Holdings Plc, Access Bank Plc, Fidelity Bank Plc, Nigerian Breweries Plc, MTN Nigeria Plc and United Bank for Africa Plc.
THISDAY investigation revealed that Nestle Nigeria Plc recorded the most active traded stock on NGX by insiders, followed by MTN Nigeria Plc.
Between January and December of this year, Nestle S.A, a majority shareholder in Nestle Nigeria purchased ordinary shares worth N25.6billion at a unit price of 18,459,945 and average price of N1,394 per share.
Combined with Mr. Femi Otedola’ s N2.3billion purchase of shares at aggregated volume at 200,000,,000 and N11.52, FBN Holdings with other two transactions recorded N2.43billion insiders transactions in one year.
Otedola who turns a significant shareholder purchased 70,000,000 units of FBN Holdings at N11.50; 55,000,000 units at N11.35; 40,000,000 units at N11.65 and 35,000,000 units at N11.65 from top management of the Holdings.
Karl Toriola who was a former Non-executive Director at MTN, Ishmael Nwakocha, an employee of the telecommunication company, Chioma Okigbo, and Anthony Tochukwu Obi, the company’s Manager, Business Intelligence and Strategy transacted a total of N303.5million worth of shares in the company during the period under review.
Toriola who is now the Chief Executive Officer, MTN Nigeria 2021 purchased an aggregate 515,102 ordinary shares at average price of N165.61 per share and 253,982 ordinary shares at average price of N162.96 per share on the NGX.
He also bought 679,370 ordinary shares at average price of N159.30 per share on March 2021.
Insiders in Nigerian Breweries traded N2.87billion worth of stocks in 2021, while Zenith Bank recorded N702.46million worth of transactions in 18 deals. As Fidelity bank recorded N193.08million worth of insider transactions, Access bank in three deals recorded N101.9million worth of transactions between January and December..
In addition, UBA, recorded N49.97million worth of transaction with a unit price of 6,158,628 units at N15.18 average price.
The Bourse had introduced insider-trading rules following a CEO decision to sell part of its shares when it declared a closed period for trading in its stocks.
“The problem wasn’t about the CEO selling his shares in the bank,” said a stockbroker, who pleaded anonymity, “but it was about; why in heavens name was he selling such large volumes at the beginning of a new year before the release of banks audited financial statements.
Commenting on inside related transactions, analyst at PAC Holdings, Mr. Wole Adeyeye noted that: “Most times, when the price of stock is below the intrinsic value in the market and the company has strong positive outlook, directors may likely buy more shares in the market.
“However, when the price of the stock is very high in the market, some directors may decide to sell part of their stocks in the market. Other reasons for selling more stocks could be that the director is planning to exit the company or to meet his urgent personal need.”
The bourse in January 15, 2020 in a circular required listed entities to file details of all transactions by Directors and other Insiders
To provide clarity on insider dealings and who an insider is; and when such insider’s transaction could be considered legitimate, the NSE in a circular on January 15, 2020 defined insiders in line with Section 315 of the Investment and Securities Act (ISA), No. 29, 2007 and Rule 400 (3) of the SEC Consolidated Rules, 2013.
According to the circular signed by Head, Listing Regulation Department, Godstime Iwenekhai: “Rule 17.15(c): Disclosure of Dealings in Issuers’ Shares, Rulebook of The Exchange, 2015 (Issuers’ Rules) provides that all directors, persons discharging managerial responsibility and persons closely connected to them as well as all insiders of the Issuer shall notify the Issuer in writing through the Company Secretary of the occurrence of all transactions conducted on their own account in the shares of the Issuer on the day on which the transaction occurred and the Issuer shall maintain a record of such transactions which shall be provided to The Exchange within two (2) business days of The Exchange making a request in that regard.
“In respect of insider actions in 2020, the NSE circular noted that companies needed to do the following: File with The Exchange, details of transactions by Directors and other Insiders from; and January 2020 to the date of this Circular, i.e., 15 January 2020. The details to be filed with The Exchange are as set forth in the attached Appendix A to this Circular.
“This information is required to be filed no later than Friday, 17 January 2020 through the Corporate Action Channel of the Issuers’ Portal. Effective from the date of this Circular, i.e., 15 January 2020, all Issuers are required to file information on Insider transactions subsequent to 15 January 2020 with The Exchange in the format prescribed in Appendix A to this Circular within two (2) business days of such transactions through the Corporate Action Channel of the Issuers’ Portal.
“For the sake of clarity and by way of example, please note that if an Insider transaction occurs on a Monday, the Issuer is required to file the requisite information no later than Wednesday of the same week. If the Insider transaction occurs on a Friday, the Issuer is required to file the requisite information no later than Tuesday of the following week. If the Insider transaction occurs on a Friday and the Monday is a public holiday, the Issuer is required to file the requisite information no later than Wednesday of the following week.”