UNITED Group's Richard Leupen has neatly defined the pitfalls of the existent regulatory witch-hunts by using changed disclosure requirements as an reprieve to inspire about $27.5 million. That stated case for the trading of 2.5 million shares -- disclosed yesterday -- was the suggested unheard of disclosure of boundary loans on vice-president shares. The unaffected reason, one suspects, is a tittle different, even if we take all that he says at front value. The timing of the sales event stinks.
But with a fair chunk of his prosperity tied up in United stock, some diversification at bargain-basement prices may help, and what better run things for the manoeuvre than mooted regulatory changes? Leupen confided that he sold the shares to gain off a perimeter loan, although the call in price on the loan was closer to $5 a part than yesterday's closing cost of $11.65 a share. He still owns 2.4 million shares, including some 750,000 acquired under a companions allowance and 1.4million options.
Just why he sold now, when the parentage is hovering around its 52-week miserable of $10.78 a share, and not in November, when it hit $21.87 a share, is lock due to the late disclosure requirements, he says. Now, for starters, there is no command that says directors must bare line loans.
But they have been put on perceive that, if the loans are material, then it would be better to let us positive about it. Then the printing becomes how much one should disclose. Mark Rowsthorn at Asciano, by sense of example, was ecstatic to give the number of his shares upset by a loan, but went no further. He did total that other shares in other companies were packed into the same credit and that Asciano's stock price could decay to zero before the loan was called. Leupen, by modus operandi of contrast, was advised that he should phase clearly how many shares were the subject of the advance and at what price they could be declared, and he rightly felt this to be a jot intrusive.
More to the point, he felt that if he declared that the accommodation could be called when United's commonplace hit $5 a share, then it would be an outgoing target for those heinous hedge funds. At make known prices, United is valued at $1.9 billion, so it is appealing lenient to push around. Leupen is one of many ranking executives who do not in the mood for the stock price where it is and, while conceding the hindmost profit wasn't quite flash, say the present market-place environment is poisonous.
On one selective day, he was said to have suffered a sensitivity attack, was admitted to hospital, was diagnosed with clinical downheartedness and suffered a limit call on his stock. So he dealt with one of the four rumours he could guidance and sold the sell to pay off the margin loan. Reality hinder No1: Leupen's lawyers are motion too conservative and not even ASIC at its backside-protecting best would declare that directors in point of fact declare the price at which the stock can be called. Commonsense would suggest that directors who have substantive leeway loans should declare them, especially if they are intrinsic to the company like, say, a David Coe at Allco or Wal King at Leighton.
If executives had any sense, they would not refer to to pay for interest purchases in their own assemblage in the first place. Challenger's Mike Tilley stands out on this make a point by banning it for his executives. So while United's Leupen is forthwith to prognosticate that it only became an circulation in the past few weeks, the deed is that those with memories longer than the past three years would realise that genealogy prices do escalate and fall.
When they do the latter, politicians panic, which makes regulators fall apart and allows some to be of profit to on the deathbeds of others. Equities after all are already geared vehicles, because the companies have debts. And even if they are in a BHP-type supercycle, all are cyclical in some form.
Fear beats greed, but tends to trouble more hurt on those who have employed in the latter weakness. ASIC's Tony D'Aloisio is make up for to spur more disclosure and it is honestly unbelievable how something so dense can lead to such dramaturgic changes. Leupen may not have made the best-timed tolerance sale of his life, but he raised a duo of dollars: well, more derive $27.5 million, to wisely change his income sources. That plot of course is straight out of the textbook on wholesome investment management.
Beware the return sellers STOCKBROKER market-share figures are fraught with danger, but a righteous check into of the biggest net sellers of some present-day danger stocks reveals some rare outcomes. The top two brokers overall are Macquarie and UBS, with 10.5 and 10.04 per cent respectively.
They are closely followed by Citigroup, then Goldman and the allay of the lots bunched together. When looking at the big webbing sellers on ABC Learning, Challenger, Allco, Primary and Babcock & Brown, Macquarie is the biggest, with reticulum sales of $135million. It is followed by UBS on $131.8 million, then Tricom at $37 million and then it fades off quickly. But some divergent names also appear in the cover 10, such as hedge supply Susquehanna, options clearing board Optiver, Instinet, Lehman and Opes Prime, the latter names punching well above their supermarket weights on the nett put across lists.
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