You are currently browsing the monthly archive for May 2008.
On February 28th I highlighted significant buying activity by the COO, CFO and CEO of Robert Walters (RWA, 165p) (see comment here). At times the shares have been decent performers, but have now drifted back below the FTSE 250 performance since Feb 28th.
We did see however a non exec, Martin Griffiths, last week buying 12,000 shares at 167p.
Peanuts in terms of ££ compared to the guys above, however Griffiths’ purchase takes the number of directors buying to four out of eight.
I don’t expect any near term news, but note that Robert Walters has been the subject of bid rumours in the past. One to watch.
Way back in December I pointed to ‘wise man’ Carey buying into Wolfson (WLF, 137p) shares (see note of December 21st ‘Wise of Wolfson buys back 58% cheaper‘ here).
But the shares continued to drift as Carey bought at lower and lower prices. Then the news that Wolfsons contract with Apple had not been renewed (see Times comment here) caused a 30% drop in the share price. Wolfson hit a low of 99p, and my jaw hit the floor too!.
But over the last two months Carey has been joined in his enthusiasm for Wolfson shares by three other non execs:
19th March Rob Eckelmann buys 7500 shares at 128p. He now owns 30,000 shares.
25th April Barry Rose buys 15,000 shares at 136p. He now owns 38,000 shares, and on
1st and 8th of May Michael Ruetggers, the non exec Chairman of Wolfson, buys 200,000 shares at 140p. He now owns 300,000 shares.
I am happier seeing four directors of Wolfson buying shares than one director. I take their mutual enthusiasm for Wolfson as a very positive (long term) sign.
I’m going to start to look more closely at using recent director dealing activity as a signal ahead of news. (I’m unsure about the reliability of what is essentially a long term signal being used as a forecast for short term movements in share prices. We’ll see how it goes shall we.)
All stocks listed below have news out next week.
All these stocks have seen director dealing activity which I have commented on. Click on the stock ticker to take you to the comment(s).
My favourite pick for positive feedback from an analysts visit is MISYS.
ENO neutral bid situation. Interims 13/5
ARM warm already had +ve Q1 on 29/4. AGM 13/5
CPG warm already had +ve trading update 27/3. Interims 14/5
MSY POSITIVE CEO, CFO, COO increased positions by 14%/50%/60% in late March. Analyst visit 14/5
AMEC POSITIVE CEO increased position by 50% spending £500k in April. AGM 14/5
CKSN POSITIVE CFO and CEO increased positions by 90% and 45% mid March. Trading Statement 15/5
III warm CEO Rea bought £500k on March 4th. Prelims 15/5
GFRM neutral already had trading update 1/5. AGM 16/5
All news dates are taken from Google Finance. They have not been verified with the companies themselves.
‘FSA targets insider trading deals’- BBC News May 6
Dear Hector,
I believe legitimate trading by company directors in their own shares to be a valuable source of information for the market as a whole. It has been shown widely that following ‘company insiders’ enables an investor to outperform the wider market. The information detailing those trades is quite rightly publicly available, enabling you or I to make our own decisions regarding its validity.
I believe that in the vast majority of cases where company insiders trade ahead of results or other corporate information they are ignorant of the FSA guidelines and stock exchange rules on directors dealings.
So Hector before you beef up your police force, if that is what you are doing, spend more time on educating company directors on the rights and wrongs of directors dealings. It will be a lot cheaper than investigating and taking cases to court.
I think however that when the press refers to your comments on insider trading they really mean ‘informed price movements ahead of merger and acquisition (M&A) announcements’ as per your newsletter of April 29th 2008 (see link here).
This is solely concerned with undisclosed trades made by individuals with knowledge of forthcoming M&A activity. Very very few disclosed directors dealings are of this nature.
In the protection of individual investors, and for the credibility of the London markets, I therefore fully support an ongoing vigilance over this form of market abuse.
Regards,
Simon Winfield
For other commentary see also the following:
Michael Gibersons of Knowledge Problem : ‘Would making insider trading restrictions optional for corporations suffice? and ‘Overview of Henry Manne’s ”Insider trading, Virtual Markets, and the Dog that Did Not Bark”
Chris Dillow at Stumbling and Mumbling: ‘Legalize Insider trading’
I want to recap here posts that I wrote last month, with the absolute and relative performance of shares to today. To see the original posts I am referring to, look for the title to the left of here, or type the company name into the ‘Search’ box.
April 3rd Diageo DGE 1055p NEGATIVE CALL -1.6% absolute, -7% relative
Negative call based on the news that CEO Walsh had sold £1m of shares, and upon reviewing his historical sales, found him to have excellent market timing.
April 7th Cairn Energy 2915p NEGATIVE CALL +5.4% absolute, +1% relative
Negative call on news that Non Exec Chairman had sold half his holding in Cairn
April 25th AMEC AMEC 752p POSITIVE CALL +9% absolute, +7% relative
Positive call on news that CEO Brikho had increased his position by 50%. buying £483k of shares
April 25th EAGA EAGA 135p POSITIVE CALL -13% absolute, -19% relative
Positive call based on directors buying in a vacuum of information or market knowledge on Eaga.
April 25th Galiform GFRM 71p POSITIVE CALL +18% absolute, +12% relative
Positive call based on intriguing market timing, namely CFO buying shares for the first time since joining the board in 2005, in an environment of negative news from the housebuilders.
April 30th Connaught CNT Eaga EAGA -4.5% relative
Switch suggestion (long term ‘2-3 sets of results’) from CNT into EAGA based on director selling in former, and buying in latter, as well as significant valuation differences
followthedirectors... a study of directors share dealings 