There's been a whole lot of reasons to love income trusts of late. Finance Minister Ralph Goodale has given them a thumbs up, and after years of debate, the trusts are now in the benchmark equity index.
Lost in the euphoria around these events is the fact that a whole lot of small-capitalization trusts are in a prolonged funk. The larger trusts, which made their debut last Friday in the S&P/TSX composite index, have largely recovered from the pasting they took after Finance wandered into the sector in September. For various reasons, some related to the sector, some company-specific, many smaller trusts are still well off the prices they fetched earlier this year.
In recent weeks, there's been a telling response to this bear market sentiment. Insiders have quietly begun to load up.
For example, look at Canadian Satellite Radio CEO John Bitove Jr., who you might think is preoccupied by his plans to get Canadians tuned in to the XM radio network. While he was completing an IPO on the radio play that added $500-million to his personal net worth, Mr. Bitove took the time to fill up on fast food.
Mr. Bitove dropped $1.17-million of his own cash last month to buy an additional 125,000 units in Priszm Canadian Income Fund. He's still chairman and CEO of the company, which owns Kentucky Fried Chicken outlets. With the latest purchase, Mr. Bitove increased his personal stake to 40 per cent of a trust that sports a $184-million market capitalization.
At Priszm, Mr. Bitove was buying units that are off almost 40 per cent, at $9 levels, since hitting a high of $14.99 last December.
Other small trusts that have seen various forms of insider buying include:
Furniture retailer Brick Group has seen its price fall 28 per cent since September, and last month saw 13 trustees and officers buy units, including founder Bill Comrie stepping up for 140,000 units.
The co-founders of Somerset Entertainment Trust put $6-million of their own money into a financing that paid for the acquisition of the CD retailer's main competitor, Compass Productions.
Entertainment One Income Fund saw CEO Darren Throop drop $977,000 to buy 265,000 units during the past month. Mr. Throop said the logic behind the purchase is that "the units recently have been substantially undervalued" in the wake of a 60-per-cent decline over the past year.
Insiders sell for many reasons -- anything from a new cottage to divorce to, very rarely, a sense that the company's heading into the tank. They only buy for one: They think the price is going up.
CGI tested dealers' patience
Every dealer on the Street has been vying to help BCE Inc. sell its position in CGI Group for the past few years.
On Friday, we found out who won this lucrative role.
National Bank Financial was the lead adviser to CGI on the $859-million share repurchase, and lead lender, along with CIBC World Markets Inc. and Desjardins Securities.
Merrill Lynch stepped up as adviser to a special committee of the CGI board.
Oil patch bench strength
The energy boom has dealers reaching into the oil and gas industry to build expertise on their equity desks. Salman Partners has welcomed Sonny Mottahed in Calgary. Where most sales pros graduate into these positions after internships as research associates or a trainee-type position within a dealer, Mr. Mottahed came from the business development division of Nexen, and has worked at energy companies for his entire career.
© The Globe and Mail
Only GlobeinvestorGOLD combines the strength of powerful investing tools with the insight of The Globe and Mail.
Discover a wealth of investment information and and exclusive features.
