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Chime Communications (CHW, 129p) have seen three directors buying shares this week.

Satterthwaite (CEO), Bell (Executive Chairman) and Smith (CFO) between them bought 91,000 shares at between 120 and 122.5p.

Despite the positive comments from Questor in March (see below), I consider these purchases as a MEDIUM signal as they average an increase in existing shareholdings of the three directors of only about 22%, yet three directors bought shares.

Questor March 16th 2008:

Having delivered on its previous targets, Chime has set another seven, including boosting average fees per client, margins, and the proportion of revenues it derives from emerging markets. It is doing so, founder Lord (Tim) Bell said in a climate where it has seen “no sign of any slowdown”. Indeed, he set out 10 reasons to be cheerful, although investors failed to look on the bright side and marked the shares down heavily on the day the results were released.

Questor thinks that was harsh. The company has a strong balance sheet, an excellent outlook and the shares trade on a significant, but unwarranted discount to the rest of the battered media sector.’

Andrew Harrison, CEO of Easyjet (EZJ 292p) is accelerating his purchases.

In January he invested just under £250k.

In March he invested just under £250k

On May 27th he invested £682k by buying 187,000 shares at 265p.

Since January Harrison has more than doubled his position in Easyjet to 682,000 shares.

Not bad. But I’d love to see other directors stepping up.

Chandler, Doganis, Browett and Michels have only bought a measly 30,000 shares between them so far this year. Maybe there is a difference of opinion at Easyjet about future prospects.

Due to the relative inactivity of other directors, director dealing activity in Easyjet is classified as a weak signal.

Findel (FDL, 244p) directors have accelerated their buying activity this month. Chapman (Exec Chairman) and Craig (non exec) this week bought almost 130,000 shares between them, investing over £300k.

Over the course of May six directors out of a total of nine have increased their positions by an average of 58% by investing over £1m between them.

The consistency of purchases across the board, the amount of money invested, and the average % increase in directors shareholdings means that the signal given by these directors is a STRONG signal.

Eight months is a long time in the stockmarket. Questor tipped Morgan Sindall (MGNS, 940p) only in September last year at 16.60p (see article here).

Now Morgan Sindall start to look interesting. The CEO Paul Smith joined the group in 2003, but has only in the last few months started to invest in the group.

In March Smith exercised an option to buy 100,000 shares at 207p. In 19 out of 20 options exercising cases, the director will sell 40% or so to cover his or her tax liability. Smith didn’t sell any shares.

Yesterday Smith bought 34,000 shares at 967p, investing £327,000.

So in the last three months the CEO of Morgan Sindall invested £527,000 and increased his shareholding from about 66,000 shares to 205,000 shares. Certainly an interesting and noteworthy move.

I am now starting to rank my interpretation of directors deals by ‘signal strength’.

Morgan Sindall gets a ‘medium strength signal‘ rating because of the size and consistency of these purchases, but doesn’t make a strong signal due to the lack of support for Mr Smith that would be seen if other directors bought shares.

Despite warning that 2008 will be a difficult year (see Scotsman article of May 9th here), BPI or British Polyethylene (BPI, 242p) Chairman Cameron McLatchie continues to buy.

His major issues are weak sterling and rising oil prices (see BPI website for full statement). Maybe he believes BPI can cover some of this increased cost through ongoing cost cutting.

I give him credit for having sold within a whisker of the high of BPI, selling 300,000 shares at 637p in March and April 2006. The shares reached a high of 715p. And recently reached a low of 227p.

McLatchie has bought over March and May this year so far a total of 150,000 shares at between 235p and 238p, taking his holding back up to 462,000 shares.

This will no doubt be a long term investment for him, and for me if I choose to follow him. And possibly pretty volatile too as I haven’t a clue where oil prices are going, do you?

‘Corporate insiders on balance are betting on a rising market. The recent pace of insider selling is right in line with the long-term average. Insiders are not signaling any major market break in the next 9 to 12 months.’

So reports Mark Hulbert in Marketwatch May 21st.

He is looking at the Vickers Weekly Insider Report, published by Argus Research.

Click here to see the article.

Back in December I got all excited about Patrick Jollys lone purchase of 25,000 shares at 585p in Findel (FDL, 280p) (see my December article here). Since then the retailing economy in the UK has turned down, and Findel warned about an increase in bad debts. The share price is now £3 lower.

Just last week we had a reassuring set of results from Findel.

And since then four members of the board have been buying shares:

Patrick Jolly (CEO) has invested £21k at prices between 283 and 288p.

Anthony Johnson (Non exec director) has invested £58k at 292p.

Keith Chapman (Exec Chairman) has invested £740k at 296p, and

Ivan Bolton (Co Secy) has invested £33k at 272p.

All these purchases were made between the 15th and 19th of May, after the company declared results on the 15th of May.

I think four investors buying is a better signal than one.

Investing six times the money between them that Jolly did in December.

At half the price too!!

This reminds me a little of EMI and Enodis, where takeover talks failed, directors piled in, then the takeover talks were resumed, this time successfully.

Fiberweb (FWEB, 51p) however is tiny, with just a £60m market cap.

Takeover talks collapsed on April 23rd (see Independent comment here).

Between the 8th and the 15th of May, the CFO Abrams, CEO Dayan, and Non exec Stillwell all increased their positions substantially:

Abrams (CFO) bought 108,000 shares at 45.6p, investing £50k. He now owns 108,000 shares.

Dyan (CEO) bought 760,000 shares at 45.6p, investing £347k. He now owns 960,000 shares.

and Stillwell, a non exec director of Fiberweb, bought 60,000 shares at 40.5p, investing £24k. he now owns 87,000 shares.

So £370k invested between them, increasing existing positions substantially, with the potential now that capital markets are recovering for the bidder to come back again.

I’m astounded. CEO Brewer, Chairman Waldron, and CFO Wilson each bought around £200k in shares at 393p on 13th or 14th May.

Then today, the 15th May, Headlam (HEAD, 396p) announce Interim results. I’m not a regulator or a lawyer, but shouldn’t these guys wait until after the results before buying shares?

Enough said.

Floor coverings, mostly UK, sales up like for like, margin up, positive outlook – IN FLOOR COVERINGS !!

Directors have added to existing positions in Headlam by between 11% and 16%.  Not huge, but worth noting. The £200k cost to each of them though is significant.

Headlam is a tiddler covered by only a couple of brokers, so I think the signal generated by director buying is significant.

On April 3rd I highlighted Mr Walshes last sale of Diageo (DGE, 1047p) shares (see commentary here).

I was particularly impressed with the fortuitous timing that Mr Walsh seemed to have shown with his previous share disposals.

Since April 3rd, Diageo shares are down 1% absolute, or down 6% relative to the FTSE.

I see no reason that May 9ths sale by Paul Walsh of 125,000 shares at 1040p shouldn’t be a continuation of either his good luck or expert timing.

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