eaga (EAGA, 135p) is a little understood company. It is more than 51% owned by its employees and directors, is trading below it’s IPO price of 181p, and its activities encompass something investors have little experience in, namely working with social housing providers and utilities in the replacement of heating systems.

The shares recently ‘collapsed’ from 200p at the end of February, to 135p now, on the back of an interim report pointing to cost squeezes and demand delays.

In January all the executive directors bought stock, at around 150p. I ignored this signal because the size of the purchases relative to the existing holdings were at 1% irrelevant.

But Malcolm Simpson, a non executive director of eaga, then increased his holding by 45%, investing £38,000. Last week he invested a further £40,000 by buying 30,000 shares at 133p, taking him to 88,000 shares.

And this week Dave Routledge, an Executive Director, has invested £99,000, buying 75,000 shares at 132p. In the context of Mr Routledges pay (£231,000- source: annual report 2007), his investment of £200,000 since January should be seen as significant.

I believe that eaga shares are underheld and the company unknown by UK investment institutions, and that therefore the information on directors dealings as highlighted above is significant.

Also see April 30th post on eaga and Connaught here.