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I missed this clear signal from the Emap directors. I noticed two of them (Cathcart and Griffiths) buying up stock on the 11th of December, and missed announcements of further director activity which strongly reinforced the signal…

7th December Emap announces ‘ has terminated all discussions with parties interested in Emap Communications’. Share price falls from 825p to close at 746p on 7th December.

11th-14th December- Five out of the nine Emap Directors buy shares between 732p and 757p, increasing their existing holdings by between 1/4 and three times. Those directors are Carter, Rough, Harrison, Cathcart and Griffiths. Clearly these individuals passionately believed that the market had got it wrong, and was undervaluing EMAP.

21st December- Emap announce an offer worth 931p per share.

Why this was a clear signal:

1. many directors buying, both exec and non exec

2. directors buying significant positions, up to three times the size of their existing position

3. market fed up with lack of bid, arb/hedge funds unwinding positions, therefore opportunity to buy undervalued shares

Why I missed it? Because my system for following directors share activity wasn’t rigorous enough.

Message for you: Pay attention to directors share dealing activity

Take a look at this wise wise man. John Carey, Chairman of Wolfson Microelectronics (WLF 208.5p).

John Carey, Wolfson Chairman

In 1969 he founded Advanced Micro Devices.

In 2000 he became Chairman of Wolfson.

Last year, March to May 2006, he sold 400,000 shares in Wolfson at an average price of 488.25p. He even managed to sell half of these shares at a penny above the all time high close, at 557p!!

Between November 16th and December 18th 2007 he has bought them all back, at an average price of 205p. That is 58% below where he sold them.

Yes, he does own almost 4.4m shares. But this was such a good trade, and this guy is so knowledgable, I thought it worth mentioning.

Aegis logo

I was prompted to take a relook at Aegis (AGS, 115p) today after reading Questors thoughts. I had noticed in November unusual behaviour by three executive directors who were buying shares in their employer, in an industry I believe to be highly exposed to economic growth. I noticed then that this was a company well positioned to benefit from ‘digital media’.

Mainardo Nardis (CEO of Aegis Media division), Alicia Lesniak (CFO), and Robert Lerwill (CEO) all bought shares between 14th and 19th November, at prices between 116p and 118p, totalling £175k. This was a change in behaviour, as three other directors at Aegis (Chedore, Hicks and Verklin) had, over 12 months to May 2007, unloaded about 3.2m shares between them at prices between 126p and 145p.

It is rather brave don’t you think to buy shares and then, only one month later, issue a trading statement which results in a 6% upward move in the share price? Here is a brief extract: ‘Group organic revenue growth ….remained very strong, and significantly ahead of the market’.

I also agree with Questor ‘it looks like good value’.

I’ve been looking at Glen Moreno (Non exec Chairman) of Pearson (PSON, 705p) share purchases. Moreno appears to be a pretty cautious guy, buying 5000 shares at a time, so he hasn’t really hit my radar. But looking back, he has invested about £360k in 45,000 shares in Pearson since August 2007, increasing his holding by almost 50% to £1.2m. He last paid 703p on the 18th December for 10,000 shares.

Now take a look at Reed Elsevier (REL, 653p), also a FTSE100 media stock. Here we see Patrick Tierney realising £159k through a sale of 25,000 shares, taking his holding down to just 37,000 shares, worth about £243k.

Patrick Tierney

Tierney is Chief Executive of Harcourt Education, a division of Reed Elsevier. He is also a pretty shrewd market operator, having exercised options over 171k shares and then sold the shares within 2% of the years high for Reed, at 676p. It appears he also sold a further 52k shares at 644p on the same day in May.

It may be that Patrick Tierney no longer has a job, as Reed have recently completed the sale of their Education division, and that is why he is selling down his position in Reed. But I would give him due credit for his trading ability, and suggest that the recent share price run in Reed is coming to an end.

Reed Pearson relative performance- source

We’ve looked at, reported on, and acted on recent property sector ‘insiders’ activity (click on ‘real estate’ tag to the left).

Now Anthony Bolton, guru portfolio manager, tells us he is doing the same thing, namely buying property stocks. Follow this link to The Times article. 

Bolton has an awesome reputation, so please listen to him.

Fabiola Arredondo clearly believes in this story. Enough to commit to Experian (EXPN, 414p) a further £232k last Friday at 416p, on top of £176k invested at similar levels back on the 16th and 20th of November.

Fabiola Arredondo- non exec Experian- photo courtesy

I said in my post on Experian of 29/11 that I would like to see Fitzpatrick, another non exec, committing more capital. Maybe last Wednesdays investment of £86k by non exec Alan Jebson makes up for that.

Alan Jebson- Experian non exec

To summarise then, we’ve seen four non execs commit a total of just shy of £1.1m to Experian shares in the last three weeks, at between 410p and 431p.

My sunburnt nose tells me there’s a very nice story developing here, and I’m off to buy some EXPN for myself.

Today reports on RBS: ‘ Sir Fred Goodwin, chief executive, said the bank had been “comparatively unaffected” by turbulence in world markets and the write-down because of credit market moves would be a net £950m in the second half. This is below the £1bn to £2bn range of expectations.’


On November 12th followthedirectors reported: ‘Strong message from RBS’. ‘Five non exec directors of Royal Bank of Scotland (RBS) last week bought shares at between 403p and 423p. They increased their shareholdings by a significant amount, by between 25 and 150%, and put in between £40k and £495k of their own money.

I went on to comment that ‘For a bank which is supposedly sitting on possible losses of several billion pounds this is certainly interesting behaviour. It also signals to me that the market has oversold RBS in anticipation of the disclosure of these losses.’

So, friends, did the market listen to the strong message that the RBS directors were sending? Mostly, yes.

The FTSE over that period is up from 6300 to 6500, a rise of 3%

Since my report on November 12th in the am, RBS are up from 402p open, or 406p where I bought them that morning, to 493p now, a rise of 21%.

And while I’m blowing my trumpet, in the same post I suggested a switch (or short position) out of Standard Chartered and HSBC into Barclays and RBS.

If you (or I for that matter) had done this, then your long positions would be up on average 19% (RBS 21%, Barc 17%) and your short positions up on average 8% (Stan 15%, HSBC 1%), a return of 11%. Go back to my post of November 12th for director dealing driven signals that prompted this suggested trade.

Where in the Retail sector do you see the CEO doubling his position and raising the interim dividend by 12% at what we must all see as times of great uncertainty for consumer spending in the UK.

Patrick Jolly was a non exec of Findel (FDL, 598p), previously known as Fine Art Developments, for five years. Jolly, now CEO as of May 2006, is clearly very confident having just last week announced outstanding interim results, and sees the level of Findels share price as an opportunity.

Jolly paid 585p for 25,000 shares on Monday.

The outgoing CEO Tony Johnson, has been selling down his holdings (presumably accumulated over his 16 year career at the firm), raising almost £1.9m when the share price was at 745p in May this year.

I think Findel goes on the buy list as a result of Jollys confidence. I wouldn’t be surprised to see other purchases from Jolly and his merry crew on any further weakness in the stock price.

See for the Interim results.

CFO of Next (NXT, 1740p) David Keens increased his holding in the group by 10,000  shares to 145,000 shares this week, at 1711p, investing around £171k.

David Keens, CFO of Next

Is this significant? Maybe. If you assume that Shirley Keens and David Keens speak with each other, and their finances are related, then this purchase partly reverses a sale by Shirley Keens of 45,000 shares at 2245p on April 17th this year, raising £1m. However the press release at the time claimed that Shirley Keens ‘manages her assets independently’ of Mr Keens.

Simon Wolfson, CEO, in March raised over £3.5m by selling 160,000 shares at prices between 2303p and 2309p.

Another recent buyer is Christos Angelides (exec director), who was credited with being a ‘weather forecaster’ in the last week of July, investing £180k ahead of a desperately needed sunny weekend. Next shares rallied by £3 to £22 in the three months after his purchase.  Last week Steve Barber (non exec) also stepped up, but invested only £8,000.

Why am I not totally convinced? Because Keens has only increased his holding by about 8%, and I’d like to see a little more commitment from both him and other directors in the sector, where we’ve seen purchases by directors of WHSmith, Lookers and Pendragon in the last week.

Enodis (ENO, 172.5p) is a nice little mover, and not new to bid rumours. Its directors seem to consistently take advantage of any setbacks in the share price.

To see if a pattern has been established, let’s go back a couple of years, to January 2006:

Jan ’06- Mike Cronk (non exec) and David McCulloch (ceo) both buy 50k shares each, at prices between 133p and 136p.

June ’06- Enodis reaches 215p (on news of discussions with Manitowic ticker: MTW)

August ’06- Peter Brooks(non exec and chairman) and Mike Cronk buy 38k shares between them at 171-172p

Jan ’07- Mike Cronk buys another 50k at 208p

Feb ’07- Enodis trades up to high of 223p (despite co rejecting AGA bid approach in Nov 06)

Sept ’07- Peter Brook buys 30k shares at 175p

Oct ’07- Enodis trades up to 215p on more bid rumours (supposedly Manitowoc again)

Nov ’07- Joseph Ross (non exec), David McCulloch (ceo), Mike Cronk (non exec) all buy shares between 166p and 186p.

In my opinion these recent purchases are not significant in terms of the number of existing shares held, but they do show a continuation of a significant behavioural pattern, from which you and I should be able to benefit.

Maybe sufficiently to be able to buy a new kitchen!

Enodis Kitchen

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December 2007