Selfridges Bridge, Birmingham. SFR steel.

Severfield-Rowen, or SFR plc (SFR, 257p), a supplier of structural steel to large infrastructure projects in the UK, recently warned of softening demand going into 2008, which resulted in a 40% drop in share price. This could have been because investors were shocked to hear negative news on January 24th, having only as recently as December 10th had an upbeat pre close trading statement. Maybe in retail you might see such a quick shift in the trading environment, but not in a business such as structural steel, with long lead times.

So do SFR know what is going on with their customers, or was this just a screw up by SFR management, their brokers, and PR advisors?

I’ll let you decide on this evidence:

Five directors of SFR (11 exec and non exec directors) sold shares between 498p and 565p (adjusted for split) in April and May 2007.

After the share price collapsed last week (January 24th from 390p to a low of 222p the same day), five directors bought shares at between 256p and 258p, investing between £20k and £99k. They increased their holdings by between 50% and 200%.

The icing on the cake came this week, when non exec Chairman Peter Levine invested £992k in 400k shares at 248p. Levine has been Chairman of SFR since 1998. He has been selling SFR shares since April 2006, selling a total of 265k shares (equivalent in new post split form). This is the first time I’ve seen him buying (as far as I can find in the data), and he has increased his position by a multiple of four.