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Lord Cairns and Guy Wilson, both recently appointed non execs at Fresnillo (FRES, 405p) have both invested £57,000 each, to initiate a position in the worlds largest silver mine.

I take these purchases with a pinch of salt, as

1. Cairns and Wilson have only recently taken up their positions as non execs (April and July this year respectively).

2. Judging by their age and extensive management history, I suspect £58k is a minimal investment compared to their net worth (see Fresnillo plc website for short bio’s)

I therefore rank these maiden purchases as giving me a WEAK SIGNAL, pending further financial commitment by these two non execs.

In times of uncertainty as to the direction of the oil price, it is with heightened awareness that I look at directors dealings in the oil sector.

But Lord Kerrs purchase of 2500 shares in Royal Dutch (RDSB, 1892p) at £18.72p doesn’t give me any direction.

He has been a consistent buyer over the last few years, but his purchases always seem to be in the upper half of the trading range for Royal Dutch’s shares.

In each of the last three purchases, he could have bought 5-10% cheaper within the next 1-3 months.

I know regulations only allow a narrow window for directors to deal in shares of their own company, but that is no excuse for paying too much.

There’s been a lot of hype surrounding Liberty International (LII, 984p) recently, with two ‘stakebuilders’ active (see Times comment below)

So it is interesting to see an announcement on Friday about a PDMR (senior management) individual exercising options and selling all the shares. ‘Normal’ behaviour across most situations where options are exercised, is to sell sufficient to pay all associated taxes (so around 40% of the exercised shares).

Liberty announced that (PDMR) Harold Newton had exercised 22638 shares, and sold the same number, leaving his holding unchanged at 93010 shares. One implication of this might be that Newton didn’t think it imperative to hold on to the 13,000 shares he didn’t need to sell for tax reasons.

From
August 23, 2008

‘Bid prospect puts new life into Liberty International

Market report

Bid speculation became the dominant theme in a rising market yesterday with much attention centred on Liberty International, the group behind shopping centres including Lakeside and Covent Garden.

Liberty rose 70p to 945p after news that Simon Property Group, one of the largest public real estate operators in America, had raised its stake in the company to 3.45 per cent.

Simon has been gradually and quietly building its stake in the British retail-focused real estate investment trust (Reit) for the past few months, taking advantage of its weak share price, dragged down by plummeting property valuations. This month Liberty reported a 7.4 per cent fall in the value of its portfolio and gave warning that the property market was unlikely to pick up in the near future.

It is understood that the two groups have a close relationship, but it is thought unlikely that Simon’s stake-building will lead to a bid. The 8 per cent rise in Liberty’s share price also reflected a degree of short squeezing as those who had been bearish on the company covered their positions.’

I remember fondly my Haynes manual, covered in grease and brake fluid, and an absolute necessity in my dire attempts to reassemble my sky blue Triumph Herald after my earlier overenthusiastic exploratory activity.

So I’ve taken a look at recent directors dealings in Haynes (HYNS, 178.5p), despite its very limited size (£13m mkt cap).

Chairman John Haynes on Thursday bought 35,000 shares (including 20,000 in his wifes name) at 170p, up 30p from the previous days close due to enthusiastically received results. Haynes now holds 130,000 shares.

Chief Executive Eric Oakley bought 20,000 shares at 165p, taking his holding to 43,000 shares.

I believe these purchases to be significant:

1. They are an increase in existing holding of 35% and 90% respectively.

2. They are the first purchases by Haynes directors in almost SIX years. Also worth noting is that Director MEF Haynes last sold shares at 378p in March ’05, and John Haynes last sold in October ’03 at 313p.

I believe the Signal Strength implied by the directors purchase activity merits a STRONG rating.

Directors dealing news this week has been like the number 19 bus. None all week, and then they all come at once, on Friday. Let’s start with Diageo:

Paul Walsh, CEO of Diageo (DGE, 1017p) has sold again, this time selling 39148 shares at 1001p, taking his holding to 644,000 shares.

I have earlier commented (see here) on Walsh’s fortuitous timing in selling down his position, and will now put some numbers to show his success:

Date/Sale price/3 month performance relative to FTSE 100/Note

30/10/07 1100p. +2% Sale post options exercise

15/2/08 1081p -12% Outright sale

18/2/08 1068p -13% Outright sale

1/4/08 1050p -8% Sale post options exercise

9/5/08 1040p +8% Sale post options exercise

29/8/08 1001p ?? Outright sale

I think you can see where I’m coming from here.

Walsh’s timing has proven to be pretty good historically. I wouldn’t be buying DGE here.

Signal Strength remains MEDIUM

I read with interest the report (link to Forbes article here) on the interview with Steve Ingham, CEO of Michael Page (MPI, 385p ) in Finanz und Wirtschaft where he was reported as saying that ‘Yes, he would consider selling the company at 600p’.

This is supported by historical director sales back in April and May 2007, which took place at between 560p and 580p. Those sales, in my view, indicated that the directors believed Michael Page to be fairly, maybe fully valued at those levels and at that time. The subsequent purchases in November 2007 at 280p, as reported below, would therefore indicate that the directors thought Michael Page to be undervalued.

Now we know the offer price, we need to find the bid price from Adecco. I would hazard a guess that an agreed deal would be possible in the high 400p’s.

Last Thursday, November 21st, the three amigos at Michael Page International (MPI), CEO Ingham, CFO Puckett and MD Dumon, stepped in to buy back shares they had sold only 7 1/2 months earlier at twice the price.

Steve Ingham, CEO of MPI Stephen Puckett, CFO of MPI

They each bought 170,000 shares at 280p. Puckett and Ingham sold on April 10th around 147,000 shares at 560p each. Dumon sold 428,000 shares on April 10th and May 4th at between 560p and 580p.’ (posted on followthedirectors on November 25th 2007, full text here).

For all comments on Michael Page click on the ‘TAG: Michael Page’ at the top of this post.

Disclosure: I have a position in Michael Page shares.

I notice today the big underperformer in Sydney today is Brambles (BXB, A$ 7.45).

Poor results and some spiel about weakening consumer spending in the US, and the fact that they still haven’t resolved the Walmart negotiations (see Bloomberg comment here).

Lets step back to my comments of March 23rd :‘Brambles directors have been buying through 2006 and 2007, at prices between 506p and 557p in 10s and 20s (thousands of shares). The stock peaked in October 2007 at 650p. Then, last week, Craig van der laan de Vries, ‘Group President of CHEP Asia Pacific’ sells almost 20% of his holding, 160,000 shares at 440p, raising £702,000.’

In fact since March 20th Mr de Vries has sold over 700,000 shares in Brambles, realising £3.2m (AUD $6.6m), and leaving him with only 130,000 shares (source digitallook.com).

Since my comments on March 23rd Brambles shares are down 23% in AUD terms, and have underperformed the local market by almost 20% !!

So, shareholders and investors, why didn’t Mr van der Laan de Vries tell us what was going on then. Maybe the board were hoping you wouldn’t find out about the pressure from Walmart, or that the slowdown resulting from a fall in consumer spending would go away.

I can only imagine things continuing to deteriorate for Brambles.

For previous negative comments on Brambles of March 23rd and June 2nd see link here.

Raymarine (RAY, 129p) is ‘the world’s leading designer and manufacturer of integrated marine electronic navigation systems for recreational boats’.

So you can imagine what’s happened/happening to their order book as leisure boat sales take a tumble. See this Times article today for a [negative] view on yesterdays results.

So why then are directors buying? Between June 25th and yesterday, five out of the six directors have bought stock:

Peter Ward, Chairman, bought 32,000 shares at between 126p and 132p, taking his holding to 83,000 shares,

James Webster, Non exec, bought 10,000 at 126p, now holding 20,000 shares,

Stephen Day, also non exec, bought 10,000 at 128p, now holding 10,000 shares,

Malcolm Miller, CEO, bought 100,000 shares at 147p, now holding 567,000 shares, and

Tony Osbaldiston, CFO, bought 31,000 shares at 135p, now holding 240,000 shares.

In total 184,000 shares bought at an average just shy of 140p.

I’m torn between viewing these purchases as a STRONG or a MEDIUM signal. I’d like to see a greater commitment in terms of % of existing shareholding by the execs (roughly 14-21% increase in holdings), as well as a greater ££ spend.

I’d disagree with the Times recommendation of a Sell on Raymarine, as I think having 5 of the 6 directors buying is a positive signal.

Signal strength: MEDIUM

Three directors of Serica Energy (SQZ, 69.5p) have been buying shares.

Serica Energy (link to company website) announced on Friday August 15th that:

Anthony Walker, Non Exec Chairman, bought 360,000 shares at 69p to increase his position to 5.6m shares,

Paul Ellis, CEO, boughtt 200,000 shares at 69p, to take his holding to 650,000 shares, and

Christopher Hearne, CFO, bought 75,000 shares at 69p to take his holding in Serica Energy to 675,000 shares.

Between them they have invested £440k.

In March 2008 directors Ellis and Cartwright bought shares at between 71p and 83p. Subsequently the shares reached a recent high of 108p in May. They then only bought 110,000 shares between them.

I consider Fridays purchases to be more significant as three directors are buying, investing significant amounts, and increasing their positions by an average of 20%. Signal strength: STRONG


M&S (MKS, 276p)

Deputy Chairman Sir David Michels on August 14th bought 37,734 shares at 265p, taking his holding to 113,984 shares. This is in addition to his recent purchase of 47,500 shares on July 29th.

The retail sector has been firm recently on the back of weaker oil prices, maybe anticipating that inflation in the UK will fall away in the coming months.

I mentioned in my last post of July 30th that I needed to see more commitment from other directors before buying shares myself. Thursdays purchase by Michels hasn’t changed this.

Signal strength for M&S remains WEAK

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