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With the drought still lingering and having an effect on food producers, analysts seem to be refraining from trading in soft commodity-dependent stock Pioneer Foods.

Though the share price of the producer of Bokomo breakfast cereals and White Star maize meal has been in recovery mode of late — it’s hard to forget that at the height of the drought it lost about 40% in value. It fell from a high of around R211.64/share to lows of R125.38/share in February this year. Most market analysts have pinned a “hold” recommendation on it while the uncertainties about crop estimates persist, despite the stock having shown signs of recovery, now trading at R181.89/share.

Directors of the company are also showing signs of weariness about crop outlook.

Felix Lombard, a director of Pioneer Foods’ grocery subsidiary, recently entered into a zero-cost collar hedge to protect his 105,000 shares. He limited his downside risk per share at a put strike price of R184 — capping the share’s upside performance to a call strike price of R194.50. Lombard’s transaction will be settled on March 20 next year.

CEO Phil Roux headed the process by taking the first step to hedge 206,500 shares which were to still form part of his portfolio upon them vesting, last week. He instead limits his losses to R167.10/share with a call strike of R190/share up until the end of February next year. Lombard is seemingly the more risk averse of the two by wanting to exercise his options to sell the shares when they trade at R184/share, while Roux would rather wait until the share drops to R167/share before getting off the position.

It was no wonder that Roux and Lombard were locking in the values of their investments, says Sumil Seeraj, an equity analyst at SBG Securities.

Seeraj also has a “Hold” recommendation on RCL Foods, producer of A1 and Tafelberg maize meals and Rainbow Chicken, which is also affected by maize prices for chicken feed.

“It has been a bad maize year. The share reacts to any changes in estimates of the crop from the soft commodity outlook,” says Seeraj. Pioneer, like other producers, finds itself in a difficult position — it cannot pass on all the cost increases being experienced without risking sales volumes.

The company managed to up its revenue by 9% to R10m (excluding biscuits, Pepsi and Maitland Vinegar from the comparative period) for the six months ended March 2015, but was affected adversely by raw material price inflation, as a result of the drought and weakness in the rand — which resulted in a decline in maize volumes.

Directors have been busy elsewhere. Ronnie Stein sold 500,000 The Foschini Group (TFG) shares last week, for which he netted just over R75m.

According to the company, the sale was for the purpose of “rebalancing” Stein’s investment portfolio subsequent to his retirement as an executive director. Stein (67), along with current CE Doug Murray, are TFG stalwarts. Stein stepped down as CFO and executive director in June last year after 17 years in the position to give way to Anthony Thunström.

Stein remains nonexecutive director of the company, while Murray was awarded shares worth R21m in June this year to extend his tenure as CEO.

TFG has set itself stiff targets for growth in the five years to March 2021: increase sales

 by 85% to R39bn, and lift operating margin from 17% to as high as 19%.