BT Group Plc directors, relatives' move to buy the stock provided a vote of confidence one week after it suffered a 21% drop
LONDON: BT Group Plc directors and their relatives bought more than $700,000 of its stock Monday and Tuesday, providing a vote of confidence in the former British telecommunications monopoly one week after it suffered a 21 percent drop.
The purchases, totaling more than 185,000 shares, were led by Anthony Ball, the former BSkyB chief executive officer and current BT board member, who bought 70,000 shares, and relatives of Chairman Mike Rake and audit & risk committee chairman Nick Rose, who bought 90,000 shares combined, according to a regulatory filing Tuesday.
With the stock trading near three-year lows, the insiders are showing faith in BT’s long-term prospects, according to Richard Marwood, senior fund manager at Royal London Asset Management. BT fell the most in more than 30 years on Jan. 24 after disclosing a deeper accounting scandal in Italy and a weaker outlook for U.K. government contracts and corporate business outside its home country.
“You’d have to take it as a sign of confidence in the way that the management think that the share price reaction has been overdone,” Marwood said in a phone interview. “BT is a fundamentally strong business, it just has some uncertainties around it at the moment and I think the share price could recover if we see some of those uncertainties get cleared up.”
Royal London owns BT shares worth about 1 percent of the company and has bought more in the past week, Marwood said.
The insiders included directors Iain Conn, Isabel Hudson and Karen Richardson, along with Ball and the relatives of Rose and Rake. They paid between 302 pence and 306 pence each for the shares, with the exception of Richardson, who purchased American depositary receipts. Based on those reports, the insiders paid about 559,355 pounds ($702,885) for the stock.
The shares closed at 302.1 pence on Jan. 26, the lowest price since June 2013. BT declined 0.5 percent on Tuesday to 303.85 pence in London.
The company’s directors are encouraged to voluntarily invest at least 5,000 pounds in BT stock each year, Dan Thomas, a BT spokesman, said in an e-mail.
In addition to the recent revelations, BT has been caught up in a regulatory fight over governance of its Openreach unit and an under-funded pension plan. There are too many uncertainties for some investors, Marwood said.
Several law firms have filed shareholder lawsuits seeking class status in the U.S. in over the accounting debacle, alleging BT violated federal securities laws by failing to disclose material information.
Italian prosecutors in Milan have opened a criminal probe into the allegations of false accounting and embezzlement.
In the U.K., the Financial Reporting Council, an accounting and audit regulator, said it’s looking into whether auditors fulfilled their duties and hasn’t decided if it needs to investigate formally.
The country’s Serious Fraud Office said it’s aware of the allegations and wouldn’t comment further. - Bloomberg
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