{"id":9404,"date":"2026-01-05T04:28:54","date_gmt":"2026-01-05T04:28:54","guid":{"rendered":"https:\/\/microvibenews.com\/?p=9404"},"modified":"2026-01-05T04:28:54","modified_gmt":"2026-01-05T04:28:54","slug":"buffett-and-why-you-need-to-eat-with-management","status":"publish","type":"post","link":"https:\/\/microvibenews.com\/?p=9404","title":{"rendered":"Buffett, and why you need to eat with management"},"content":{"rendered":"<p><\/p>\n<div id=\"textFreeArticle\">\n<p><iframe loading=\"lazy\" src=\"https:\/\/iframe.iono.fm\/e\/1631552?layout=modern\" width=\"100%\" height=\"170\" frameborder=\"0\" data-mce-fragment=\"1\"><\/iframe><\/p>\n<p>You can also listen to this podcast on iono.fm here.<\/p>\n<p>Welcome to the\u00a0Supernatural Stocks podcast\u00a0on Moneyweb, with your host\u00a0The Finance Ghost\u00a0\u2013 your weekly fix of local and international insights for investors and traders.<\/p>\n<p style=\"font-weight: 400;\">It\u2019s a new year. It\u2019s possibly a new you, depending on how you feel about these things \u2013 and happy new year to you!<\/p>\n<p style=\"font-weight: 400;\">It\u2019s certainly a new era at Berkshire Hathaway, with Warren Buffett having officially retired from the top job and handed the reins to Greg Abel.<\/p>\n<p style=\"font-weight: 400;\">Over the past 12 months, Berkshire\u2019s share price increased nearly 12% and the S&amp;P 500 was good for 16.5%. But of course the Buffett approach demands that we apply a longer-term lens to the performance. Over five years, Berkshire is up 117% and the S&amp;P 500 has done 82% \u2013 so even a medium-term lens is firmly in their favour. Not bad at all for the twilight of Buffett\u2019s career!<\/p>\n<p>Read:<\/p>\n<div class=\"ApplePlainTextBody\" dir=\"auto\">The Buffett way: How\u00a0America\u2019s fifth-richest man\u00a0redefined wealth and\u00a0responsibility<\/div>\n<div class=\"ApplePlainTextBody\" dir=\"auto\">Warren Buffett to step down\u00a0following six-decade run atop\u00a0Berkshire<\/div>\n<div class=\"ApplePlainTextBody\" dir=\"auto\">CEOs celebrate Buffett as he\u00a0calls a close on 5 500 000%\u00a0run<\/div>\n<p style=\"font-weight: 400;\">Buffett will remain involved as chair of the board. I also somehow doubt that his office at the headquarters in Omaha will get cobwebs from lack of use, as he plans to spend considerable time there. As such an iconic figure, the business he built is intertwined with his life.<\/p>\n<p style=\"font-weight: 400;\">That\u2019s the kind of management alignment that investors love seeing.<\/p>\n<p><strong>Any \u2018Buffetts\u2019 in SA?<\/strong><\/p>\n<p style=\"font-weight: 400;\">Although there are a handful of companies on the local market that feature highly involved and deeply invested founders who are still active on the board, these companies are thin on the ground.<\/p>\n<p style=\"font-weight: 400;\">South Africa hasn\u2019t exactly been a hotbed of innovation and entrepreneurship since the\u00a0global financial crisis, so we have missed out on the new listings boom powered by the global tech sector over the past 10 to 15 years.<\/p>\n<p>Read:<\/p>\n<div class=\"ApplePlainTextBody\" dir=\"auto\">After decent year, two\u00a0blockbuster JSE listings await\u00a0in 2026 [Dec 2025]<\/div>\n<p style=\"font-weight: 400;\">Where companies have been built and sold over that period, it\u2019s generally been in the private sector where private equity investors are highly active. This unfortunately doesn\u2019t do any favours for our opportunity set as retail investors.<\/p>\n<blockquote>\n<p style=\"font-weight: 400;\">This means that there\u2019s a lot of \u2018old money\u2019 on the JSE rather than \u2018new money\u2019 \u2013 and that old money tends to be managed by custodians of capital rather than outright builders of businesses.<\/p>\n<\/blockquote>\n<p style=\"font-weight: 400;\">That\u2019s not necessarily a bad thing. It just means that you need to be very careful that the management team is eating <em>with<\/em> you, not taking the food <em>from<\/em> you.<\/p>\n<p style=\"font-weight: 400;\">With expectations of a strong year for the local market and plenty of money flowing into South Africa thanks to the favourable gold and PGM [platinum group metals] prices, it\u2019s likely that there will be wealth creation on the JSE.<\/p>\n<p style=\"font-weight: 400;\">But for whom? And how can we judge the behaviour of directors and assess that as part of our investment process?<\/p>\n<p style=\"font-weight: 400;\"><strong>Disclosure rules exist for a reason<\/strong><\/p>\n<p style=\"font-weight: 400;\">Director dealings announcements come through thick and fast on Sens. In a quieter period of other company news, like in the run-up to Christmas for example, these announcements become even more stark.<\/p>\n<div class=\"visible-sm-block visible-xs-block m1010\">\n<div class=\"ad-container-wrapper\">\n<p>ADVERTISEMENT<\/p>\n<p>CONTINUE READING BELOW<\/p>\n<\/div>\n<\/div>\n<p style=\"font-weight: 400;\">The disclosure requirement is very important and is taken seriously. You may recall that the former CEO of Bytes Technology resigned after it became apparent that there were a shocking number of undisclosed dealings in the company\u2019s shares.<\/p>\n<blockquote>\n<p style=\"font-weight: 400;\">My view is that the JSE needs to have much sharper teeth with disclosure shortcomings, but at least it isn\u2019t something that directors can simply ignore.<\/p>\n<\/blockquote>\n<p style=\"font-weight: 400;\">The disclosure rules also go beyond just the directors of the listed company board. When directors of major subsidiaries trade in shares, it gets disclosed. Depending on company policies, there are also disclosures when senior executives trade. Another very important element of the disclosure is that it includes associates, for example spouses or other legal entities that the director is involved in.<\/p>\n<p style=\"font-weight: 400;\">These rules wouldn\u2019t be there if it wasn\u2019t important to consider the behaviour of directors in the context of your investment.<\/p>\n<p style=\"font-weight: 400;\">Despite this, time and again on X I\u2019ve had people shouting at me because I\u2019ve pointed out worrying sales by directors of companies.<\/p>\n<p style=\"font-weight: 400;\">\u201cWhy can\u2019t this person sell?\u201d<\/p>\n<p style=\"font-weight: 400;\">\u201cThey are also allowed to be rich!\u201d<\/p>\n<p style=\"font-weight: 400;\">\u201cI see nothing wrong here!\u201d<\/p>\n<p style=\"font-weight: 400;\">Sure. And most of the time, that\u2019s absolutely right.<\/p>\n<p style=\"font-weight: 400;\">But there is also useful information that comes from director dealings announcements. In the same way that you wouldn\u2019t ignore financial results, you also shouldn\u2019t ignore these updates.<\/p>\n<p style=\"font-weight: 400;\">But how do you spot the potentially problematic dealings, or the good news, versus the non-events?<\/p>\n<p style=\"font-weight: 400;\"><strong>Share purchases: A great sign, possibly<\/strong><\/p>\n<p style=\"font-weight: 400;\">There\u2019s an old adage in the market that goes roughly like this:<\/p>\n<blockquote>\n<p style=\"font-weight: 400;\">\u2018Directors may sell shares for many reasons, but they only buy them for one reason.\u2019<\/p>\n<\/blockquote>\n<p style=\"font-weight: 400;\">And that reason is because they are undervalued \u2013 at least in the opinion of the director involved. This means that investors tend to pay more attention to purchases rather than sales, particularly the timing of the purchase in the context of everything else that the company is busy with.<\/p>\n<p style=\"font-weight: 400;\">Of course, there are different types of purchases. If a director receives share-based payments based on share options or other structures, it will show as a purchase. But simply receiving shares as part of your remuneration package is very different to actually taking cash from somewhere else and buying more shares for yourself.<\/p>\n<p style=\"font-weight: 400;\">Think about the concentration risk. For an executive director, the company in question is their source of income. It\u2019s also where the share options sit, so there\u2019s already exposure to the share price.<\/p>\n<div class=\"visible-sm-block visible-xs-block m1010\">\n<div class=\"ad-container-wrapper\">\n<p>ADVERTISEMENT:<\/p>\n<p>CONTINUE READING BELOW<\/p>\n<\/div>\n<\/div>\n<blockquote>\n<p style=\"font-weight: 400;\">A decision to go even deeper by buying more shares is a very positive step to take and one that you\u2019ll rarely see.<\/p>\n<\/blockquote>\n<p style=\"font-weight: 400;\">When you do see it, it\u2019s worth paying attention to, as the director is going beyond the concentration risk to say: \u201cYes, I really want more shares!\u201d<\/p>\n<p style=\"font-weight: 400;\">Let\u2019s deal with another nuance now that deals with share-based compensation. When a director covers the tax out of other cash they have and therefore retains the full award \u2013 in other words, they don\u2019t sell shares to cover the tax \u2013 that counts as a purchase in my books. It\u2019s no different to taking cash and just buying shares on the market. I\u2019ll deal with that more in the selling section.<\/p>\n<p style=\"font-weight: 400;\">Something else that matters when you see purchases is the quantum, along with the identity of the director in question.<\/p>\n<p style=\"font-weight: 400;\">There\u2019s a big difference between the CEO putting millions of rands into shares and a director of a major subsidiary throwing R20k into shares.<\/p>\n<p style=\"font-weight: 400;\">Sure, it\u2019s still money, but what do you care more about \u2013 the top dog buying tons of shares, or someone further down the structure putting a small amount in?<\/p>\n<blockquote>\n<p style=\"font-weight: 400;\">Typically, the CEO and CFO would be the most useful sources of purchases from an information quality perspective.<\/p>\n<\/blockquote>\n<p style=\"font-weight: 400;\">Also be careful where companies have minimum shareholding requirements.<\/p>\n<p style=\"font-weight: 400;\">This is a great company policy and frankly it should be in place across the board to create more alignment, but it also means that purchases by a recently appointed executive might be nothing more than a compliance purchase to reach the agreed minimum shareholding level. This limits the usefulness to investors of the timing of the purchase.<\/p>\n<p style=\"font-weight: 400;\">Here\u2019s another nuance: where a director is the appointed representative of an institutional investor, then the purchases might be much larger than you would otherwise see from an individual director. Although it\u2019s good news when professional investors buy more shares, be careful of putting too much importance on that quantum. These numbers aren\u2019t comparable to normal purchases.<\/p>\n<p style=\"font-weight: 400;\">So purchases can be really good news, especially when they involve top execs buying shares outside of any minimum shareholding requirements or share-based compensation arrangements. That\u2019s the highest quality purchase.<\/p>\n<p style=\"font-weight: 400;\">And if you think that\u2019s complicated, just wait for share sales!<\/p>\n<p style=\"font-weight: 400;\"><strong>Share sales: Something big, or nothing \u2026<\/strong><\/p>\n<p style=\"font-weight: 400;\">Sales are more complicated to interpret than purchases.<\/p>\n<p style=\"font-weight: 400;\">I\u2019ll start with the trade that I personally ignore every time: sales to cover the tax on share-based awards \u2013 something I alluded to earlier.<\/p>\n<p style=\"font-weight: 400;\">When a director or senior executive receives share-based payments, there is a taxable portion. Inevitably, that portion is 45% due to the high nature of director earnings. The market norm is for that portion of the share award to be sold to cover the tax. There is no information quality in this type of trade. It tells you nothing about the share price.<\/p>\n<p style=\"font-weight: 400;\">As noted earlier, where the full award is retained and the director covers the tax with other cash, then it counts as a purchase in my books.<\/p>\n<p style=\"font-weight: 400;\">But what about the opposite, when the full award is sold \u2013 ie, not just the taxable portion?<\/p>\n<div class=\"visible-sm-block visible-xs-block m1010\">\n<div class=\"ad-container-wrapper\">\n<p>ADVERTISEMENT:<\/p>\n<p>CONTINUE READING BELOW<\/p>\n<\/p><\/div>\n<\/div>\n<p style=\"font-weight: 400;\">In that case, I certainly see it as a sale by the director that is worth noting.<\/p>\n<blockquote>\n<p style=\"font-weight: 400;\">After all, if you received these shares for nothing and the first thing you thought to do was to sell them, that\u2019s hardly a bullish signal to the market.<\/p>\n<\/blockquote>\n<p style=\"font-weight: 400;\">Then we get to sales outside of the share-based compensation cycle. These are just normal sales on the market. If they happen from time to time without much associated news from the company or major share price movements, then they are probably not useful.<\/p>\n<p style=\"font-weight: 400;\">But if there\u2019s a clear pattern, either a top director selling continuously or several directors all selling at the same time, then your ears need to prick up.<\/p>\n<p style=\"font-weight: 400;\">Has the share price had a strong recent rally? If so, the directors are sending you a message that the rally might be overdone.<\/p>\n<p style=\"font-weight: 400;\">Are the directors saying one thing and doing another, for example executing share buybacks based on an \u2018undervalued\u2019 share price and then casually selling their own shares into that buyback process? Or did they recently give flashy forecasts and big promises, all before selling?<\/p>\n<blockquote>\n<p style=\"font-weight: 400;\">The context matters tremendously.<\/p>\n<\/blockquote>\n<p style=\"font-weight: 400;\">Another important thing to keep in mind is the total value of the shareholding before and after the sale.<\/p>\n<p style=\"font-weight: 400;\">There\u2019s a big difference between a director selling all of their shares or a big portion of their shares versus a small portion of their shares. This is where you need to be careful with the quantum. It can look like a really big number, but for a director with a vast shareholding, it might be a small portion of what they hold.<\/p>\n<p style=\"font-weight: 400;\"><strong>Complicated, but worth it<\/strong><\/p>\n<p style=\"font-weight: 400;\">In summary, most of the time, director dealings aren\u2019t helpful. Sales are less likely to be helpful than purchases.<\/p>\n<p style=\"font-weight: 400;\">But it\u2019s a bit like having access to oxygen: you don\u2019t notice the problem until it\u2019s too late.<\/p>\n<blockquote>\n<p style=\"font-weight: 400;\">Monitoring director dealings is a worthwhile process when you\u2019re looking at either investing in a company or reducing exposure.<\/p>\n<\/blockquote>\n<p style=\"font-weight: 400;\">Look at what the management team is doing.<\/p>\n<p style=\"font-weight: 400;\">In 2026, I plan to keep doing exactly that: looking at director dealings and figuring out what they might tell us about the company.<\/p>\n<p style=\"font-weight: 400;\">Welcome to a new year of investing. I look forward to walking this road with you!<\/p>\n<p><em>Follow Moneyweb\u2019s in-depth finance and business news on WhatsApp here.<\/em><\/p>\n<\/p><\/div>\n<p><script data-cfasync=\"false\">\n            !function(f,b,e,v,n,t,s)\n            {if(f.fbq)return;n=f.fbq=function(){n.callMethod?\n                n.callMethod.apply(n,arguments):n.queue.push(arguments)};\n                if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version='2.0';\n                n.queue=[];t=b.createElement(e);t.async=!0;\n                t.src=v;s=b.getElementsByTagName(e)[0];\n                s.parentNode.insertBefore(t,s)}(window, document,'script',\n                'https:\/\/connect.facebook.net\/en_US\/fbevents.js');\n            fbq('init', '779812924991616');\n            fbq('track', 'PageView');\n        <\/script>#Buffett #eat #management<\/p>\n","protected":false},"excerpt":{"rendered":"<p>You can also listen to this po&hellip; <\/p>\n","protected":false},"author":1,"featured_media":9405,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[4],"tags":[1263,7213,2010],"_links":{"self":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/9404"}],"collection":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9404"}],"version-history":[{"count":0,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/9404\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/media\/9405"}],"wp:attachment":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9404"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9404"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9404"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}