ALEC and Jeffrey Wapnick, chairman and CE respectively of listed property companies Premium and Octodec, bought shares in both companies on more than 30 occasions during the past 18 months.

They bought several million shares and, thus far, their confidence has been handsomely rewarded.

Premium’s share price has climbed from 160c in March 2002 (at the time of the first major purchase by Alec Wapnick) to the current 300c.

Octodec’s share price has risen from 230c in March (when these shares were bought) to the current 380c. However, the capital gain (so far unrealised) made by the two directors by buying millions of their shares is not the only profit earned.

At the expected total distribution of at least 33c in the case of Premium and 48c for Octodec, the current return on the average purchase price in both cases is probably close to 20%.

And this was certainly not speculative buying. As recently as last week, Alec Wapnick bought 300 000 Premium Property shares at 265c to 270c/share. At that price, the expected current return on the new investment is still more than 12% – which is, of course, considerably more than one can earn now on the money or capital markets.

For investors (and especially directors) there are several lessons to be learnt from the Wapnicks’ regular buying of Premium and Octodec shares. Neither company has a share option scheme.

Directors and staff members who want to share in the companies’ prosperity must simply buy shares on the JSE Securities Exchange, which shows that it’s not always necessary for a company to create a complicated option scheme to reward directors and staff. For ordinary investors, the confidence shown by the directors through their regular buying of shares must have been an important indicator. Both knew the interest rate declines would benefit their companies enormously.

They emphasised that every six months over the past two years when their results were issued.