At 52p this time last year the Telegraph tipped Ennstone (ENN, 27.5p) as a possible bid candidate. It compared the valuation of Ennstone, the ‘last London listed aggregates company left in Britain’ with the then recent acquisition of Hanson at 12.5x ebitda (vs Ennstone at the time at 8.5x ebitda).

They went on to comment that ‘Altium, the house broker, estimates that the share price is only marginally above the company’s underlying asset value.’ (link to Telegraph article of 26/5/07)

For me Ennstone shares right now stand out by trading up on the day, while stocks in the same sector (building materials) plummet over belated concerns about UK housebuilding (capitulation stage?).

Now at 27.5p, Ennstone are trading at half the price of a year ago. Would you find that attractive?

It seems some of the directors at Ennstone do, in particular Eric Gadsden, a non executive deputy chairman. Gadsden since November has bought 2.75m shares between 40p in November and 27p on Monday, taking his holding to 3.8m shares.

I don’t think this is a ‘bid tomorrow’ situation, as there aren’t enough directors buying shares. But I do think it wise in the long term to follow Gadsdens lead.

Signal strength- WEAK (only one director buying)