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Directors' dealings

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8. The closed period

Directors are not able to buy or sell shares in their company for two months before the announcement of results. This is known as the company's 'closed period'.

There is sometimes a flurry of activity in directors' dealings just before the start of the closed period, and just after it has finished, and at both times the dealings may have heightened significance:

• Directors' dealings just before the closed period indicate how they think the results will turn out. If they are buying shares, they think the results will exceed market expectations. If they are selling, they think the results will disappoint the market.
• At the end of the closed period the directors will have had a minimum two months in which they have watched the company's progress but been unable to deal. If they take the chance to acquire or dispose of shares at the end of the closed period, it is a fair sign of how the company has been doing.

The closed period

1. What are directors' dealings? 2. Distinction from insider dealing 3. Two premises and a fallacy 4. Size of transaction 5. Who knows best? 6. Safety in numbers 7. Dealings in the context of recent share price 8. The closed period 9. Follow the leader 10. Sales can sometimes be a good sign 11. Playing the percentages 12. Other factors 13. Conclusion

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