Thursday, 26 May 2011

BP Directors' dealings: "Elevator man buys BP shares" (Sharecast)

Only just noticed this piece of news reported on the 24th May that:

"LONDON (SHARECAST) - Non-executive director George David bought more than £800,000 of shares in BP yesterday, the oil giant announced today.

He bought 30,000 American Depositary Receipts (ADS), which is equivalent to 180,000 ordinary BP shares. He paid $43.99 each for half of the ADSs and $43.98 for the other half.

David, an American, joined BP in 2008. He is a member of the chairman’s, the audit, the Gulf of Mexico and the remuneration committees. He has previously worked with management consultant The Boston Consulting Group and elevator manufacturer Otis. Following Otis’s merger with UTC in 1977, he moved up the ranks, becoming chief executive in 1994 and chairman in 1997, before he retired in 2009. "

Quite interesting from a timing point of view and given Mr David's memberships!
Is there any significance to the purchase? Well, it does depend on what your view of Directors' dealings are.
The theory runs that:- Directors are much closer to a business than you or I and should have a strong business acumen to apply to their understanding of the business and its metrics.
There are also some timing advantages as they are privy to period performance reporting that we might not see until published in quarterly trading statements or interim and full year accounts.
And, if already drawing a salary and executive share scheme benefits (Mr David is a non-exec), why would they place more of their personal monies at risk without expectation of reward.
It is obviously a difficult line to tread though, in order to steer clear of "insider dealing" accusations.

Looking at the timing of his last purchases:
- 29th October 2009: 30,000 shares @ 585p, and
- 29th March 2010: 112,890 shares @ 569p
these were made during a sustained uptrend which saw BP shares rise to their approximate 650p peak just prior to the Deepwater Horizon disaster.

So, coming back to the purchase then, its a positive for me that such a significant investment (£818,000), has been made by a non-exec Director at the current time.

Now, if just a few more of the Board would follow suit.

Article links: Elevator man buys BP shares

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