The Motley Fool

Should You Follow Director Buying At Rio Tinto plc, BHP Billiton plc And Glencore PLC?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Mining is one of the most out-of favour sectors in the market. Low metals prices and worries about global growth — and demand from China, in particular — have combined to whack the shares of mining companies.

However, directors have been buying at FTSE 100 giants Rio Tinto (LSE: RIO), BHP Billiton (LSE: BLT) and Glencore (LSE: GLEN) . Should you follow their lead and invest in these three businesses?

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...


Glencore isn’t a common-or-garden miner. It is also a commodities trader, which, management reckons, gives it a unique finger on the pulse. However, this hasn’t helped the performance of the shares, which closed on Wednesday at a record low of 122.8p — down 77% from the flotation price of 530p in 2011.

Some City experts believe Glencore will need to raise fresh equity. The analysts are also questioning — as they are with many miners — whether the current dividend is sustainable. However, in Glencore’s half-year results last month, management spoke defiantly of the company’s “strong and flexible balance sheet”, and — by way of “reflecting our confidence” — maintained the interim dividend, giving a whopping running yield of 9.6%.

Directors aren’t just talking the talk. Chief financial officer Steven Kalmin immediately bought a cool one million shares at 172.88p a share. The following day, non-executive director John Mack bought 50,000 shares at 162.85p. And, two days ago, senior non-exec Peter Grauer joined in the buying spree, with a purchase of 118,000 shares at 134.5p a pop. All together, these three directors have invested getting on for £2m.

If you’re convinced by management’s confidence in the business, you can pick up the shares at a lower price today than the directors were happy to buy at.

BHP Billiton

BHP Billiton’s directors were no less keen than Glencore’s to defy the dividend sceptics when the company released its annual results last week. The Board lifted the year’s dividend by 2% (giving a running yield of 7.8%), and said: “Our commitment to the progressive dividend is unchanged”. In the analyst briefing, the company added that it was “resolute” in its commitment, pointing out that this commitment “has withstood many previous cycles”, and suggesting that the business can generate the necessary cash flow (more important than paper earnings) to support the dividend.

Non-executive director Malcolm Brinded lost little time in splashing out £217,200 to buy 20,000 shares at an average price of 1,086p a share. This was his first purchase since his appointment in April 2014, at which time he owned 12,000 shares. You’ll be paying around the same price as Mr Brinded, if you’re buying BHP Billiton shares today.

Rio Tinto

Last month, Rio Tinto announced a 12% increase in its interim dividend, giving a running yield of 6.5%. We can’t read too much into the first-half increase, because it’s Rio’s established policy to set the interim payout at half the total of the prior year. Nevertheless, directors can always change a dividend policy, and it’s encouraging that Rio has maintained past practice, as well as reaffirming its “progressive” policy.

Three directors have bought since the half-year results, although one director’s purchase was a “non-discretionary transaction”. The other two buys — by non-execs Megan Clark and Michael L’Estrange, who both joined the company last year — weren’t exactly huge either, amounting to less than £50,000. Dr Clark bought 1,000 shares at AUD$47.90 (increasing her holding to 2,715 shares), while Mr L’Estrange picked up 700 shares at $50.93 (increasing his holding to 1,003 shares). You’ll have to pay a little more than the directors if you want to pick up Rio’s shares today.

Based on directors putting their money where their mouths are, it’s a case of the higher the yield, the more confident the directors are that their companies’ shares offer value, with Glencore (9.6% yield) being the most heavily supported (almost £2m of buys).

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

G A Chester has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.