Noble Group's Elman `Puts Money Where Mouth Is' by Raising Stake

  • Chairman buys 10 million shares last week as stock declines
  • Elman founded company after working at Phibro, scrap yard

Richard Elman used to work in a scrap yard, learning the art of finding value where others see little or none. Reprising that role, the Noble Group Ltd. chairman announced he’s raised his stake, seeing value in the commodity trader he founded and is now battling rating cuts and a share rout.

Elman bought 10 million shares in the Singapore-listed company for S$3.19 million ($2.2 million) on Friday, raising his holding to 22.13 percent, according to a statement to the Singapore exchange on Monday. Elman’s now purchased stock at least eight times over the past year, buying at least 40.8 million shares, according to a tally by Bloomberg. He remains Noble Group’s biggest owner, ahead of China’s sovereign wealth fund.

“It’s always a good sign when you see a chairman putting his money where his mouth is,” said Gavin Wendt, founding director & senior resource analyst at MineLife Pty Ltd. in Sydney. “He obviously believes the stock is cheap at these levels and is also trying to send the right sort of messages to the market.”

Noble Group, which lost about two-thirds of its market value last year amid attacks on its accounts, has extended losses in 2016 after Standard & Poor’s joined Moody’s Investors Service in cutting its rating below investment grade. Over the past year, the Hong Kong-based company has sought to reassure investors by paring debt, selling assets and boosting transparency, with Elman pledging in a letter to shareholders last June to “right the damage.” That defense has been undermined as China’s slowdown hurts commodity prices, prompting investors to shun raw-material companies.

Noble Group shares sank as much as 8.8 percent on Monday and closed 1.5 percent lower at 33.5 Singapore cents, taking their decline so far this year to 16 percent after a 65 percent loss in 2015. After leaving school in his teens and his scrap-yard stint, Elman worked at another trader, Phibro, before setting up Noble Group with $100,000 in savings in Hong Kong. A spokesman declined to comment on questions e-mailed to Elman on Monday.

“Elman is trying to say that he thinks this current bout of selloff we’re seeing is overdone,” Angus Nicholson, an analyst at IG Markets Ltd. in Melbourne, said by e-mail. “Unfortunately, his actions are unlikely to really alter investor perceptions on the company. China demand fears are dominating trade in commodities-related companies.”

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