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MAN Group (EMG, 316p) directors have announced the purchase of warrants in MAN, spending GBP 930,000 to give them exposure to 1.64m shares in MAN Group plc.

The warrants cost 57.59p each, and give them a return of the average share price over three years less the strike price (undisclosed). For details of directors transactions see the MAN Group plc website.

Peter Clarke CEO bought 1.12m warrants. He also owns 4.6m shares having picked up a few more last week just short of four pounds.

Kevin Hayes CFO bought 260,000 warrants, as did Christof Moller, who sold 45812 shares to pay for them.

John Aisbitt, non executive Chairman, bought 100,000 shares at 340p taking his holding to 1.6m shares.

Are these moves significant?

I see the warrants as a way to reduce risk to the downside (you only lose 57.59p if the company goes bust, not 300p+), and would prefer to see outright share purchases as a stronger signal of a directors commitment to the group.

Having said that I think these purchases say more about the directors using their experience to see a buying opportunity where others see collapsing markets.

So these purchases count a WEAK Signal.

MAN Group results (link to Dow Jones comment here  ) were announced yesterday, revealing a 40% drop in performance fees in the first half, but a reassuring statement on regulatory capital.

Serica Energy (SQZ, 58p) announced yesterday September 29th that six directors had bought shares in the company on September 26th at prices between 49p and 53p. They also announced that they had the same day (September 26th) received a written share offer from Salamander valuing the shares at 70p. Link to both announcements here.

I’ve a few questions of Serica management:

1. Did you buy shares on the 26th September before or after you had received the wriiten offer from Salamander (valuing the share offer for Serica at 70p using the September 26th closing prices of Salamander and Serica)?

2. Had you received a verbal offer from Salamander prior to the written offer? And was that before or after you bought shares for yourselves?

3. Were you in discussions which may or may not have led to an offer for the company at the time you bought shares on August 15th (see my post of  August 16th ‘Serica – Three directors invest GBP 440k’) ?

My view of August 16th was

‘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’.

With now 6 directors of a board of 8 buying shares, and an offer on the table, my view remains positive based on the value of directors share dealings in Serica Energy.

Signal Strength remains STRONG.

Disclosure: I have a position in Serica Energy.

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A summary of my thoughts from last week (click on stock name to get the article/post) :

Axis Shield (ASD) – Signal strength MEDIUM –  Positive- Ex Chairman of Axis (before merger with Shield) Erik Hornnaess, is seen to be payer pretty high levels for shares in his alma mater Axis Shield. The stock is up 40% relative to the market so far this year. This is postive for two reasons: a) as a non exec he knows what’s going on within the group. b) as an ex chairman he knows this business inside out. Also- if you look back you’ll see he is supported by consistent buying from directors earlier in the year.

Reckitt Benckiser (RB.)- no signal- interesting activity nonetheless, with EVP de Groot buying aggressively, and CEO Bart Becht selling shares he exercised earlier.

RBS (RBS)- Weak signal – Negative – The whole board of RBS subscribed for shares at 200p in the June offering. Now we see two directors selling. Either they need the cash, or they think there is downside risk in the shares. Or both.

Rathbones (RAT)- Medium signal- Negative – Two directors of Rathbone have taken advantage of a 50% jump in the share price to top slice their positions in the group. It is interesting to see the same thing happening at another private client broker/adviser Hargreaves Lansdown, where three directors are selling.

Tate and Lyle (TATE) – Strong signal- Positive- Six directors bought shares last week after the shares fell 10% on a court ruling. Since October last year seven directors out of a board of 10 have been buying shares, a significant proportion.

ITV (ITV) – Weak signal- Positive- CFO, Director of Television, and Deputy Chairman have all bought shares in the last week at around 1/3rd of last years share price. We may start to see more news on costcutting at the group, although I need to see more directors share buying before being convinced. In the meantime ITV goes on the watchlist. 

AIG (AIG) – no signal- my thoughts on Hank Greenberg reportedly selling shares in AIG whilst lending his support to the ‘rescue’.

Disclosure: I have a position in Axis Shield.

This must be a classic case of saying one thing and doing another. Hank Greenberg reportedly raised $129m by selling down his stake in AIG (AIG) whilst extolling the virtues of the company.

My view: ‘Actions speak louder than words’, the basis and reason for my analysis of directors dealings.

You must read FT Alphavilles article on this share sale. Click here.

In a year of turmoil for ITV (ITV, 43.5p) due to advertising slowdown, a switch away from viewing TV to computers and many other ongoing dramas, the ITV share price has fallen from 121p high in May last year, to a low of 38p in July this year.

If you look at the recent press comment, there is an ongoing discussion with Ofcom over how much ITV can cut back to reduce its costs.

In this time of turmoil it is therefore intriguing to see directors starting to buy.

Ian Griffiths, CFO, on September 10th bought 100,000 shares at 47.2p, initiating his holding, only a day after he was appointed (did he feel duty bound to buy shares to shares?).

Peter Fincham, Director of Television, on September 24th bought 350,000 shares at 42.75p, also initiating a position.

And Sir George Russell, the Deputy Chairman, via Lady Russell, bought 57,000 shares at 43p on September 24th, taking their holding to 62,000 shares.

I’d like to see a few other directors buy shares at these levels, especially when they’ve paid prices 50-150% higher in the past. In particular Cresswell, Ormerod and  Crosby.

In the meantime these transactions merit a ‘WEAK signal’, with the potential to be upgraded pending further director purchases.

Tempus on Wednesday declared that ‘Tate and Lyles share price caning is an opportunity to buy back in’, after the share price fell 10% over the judges decision of a patent case on sucralose.

Clearly management at Tate and Lyle (TATE, 384p) agree with Tempus. Six directors bought shares at just over 380p on Wednesday and Thursday this week, investing just under GBP 30k each on avearge, and increasing their holdings by an average of close to 60%.

Directors have been active at prices between 380p and 440p since October last year, taking the total number of directors (exec and non exec) buying shares to seven out of a board of 10, a significant proportion.

I’d love to see a bit more cash committed by directors, but in light of the consistent buying over the year, the % increase in holdings, and the high proportion of the board participating, I believe these share purchases to be a STRONG signal.

Signal strength: STRONG

For details of directors activity see, type in TATE, and choose Director Deals tab.


Up almost 50% from Julys low (730p), Rathbone (RAT, 1060p) (chart) are seeing a couple of their Executive Directors take advantage of a strong share price to reduce their exposure.

Richard Smeeton has sold (on 19/9/08) 12,000 shares at 1035p taking his holding to 115,673 shares, and Andrew Morris has sold (23/9/08) 11,791 shares at 1063p, taking his holding down to 41,268 shares.

Another two directors (Ian Buckley and Richard Loader) have also sold, but in much smaller size. 

These trades echo selling at Hargreaves Lansdowne (see my posts here), also up 50% from the lows, where three directors continue to sell.

Four directors selling, but not a significant portion of their holding, warrants a MEDIUM strength signal. The risks lie on the downside.

Addendum October 14th:

Further sales have been reported as follows:

Clive Hexton, on the board of Rathbone Investment Management, has sold 5200 shares at 983p taking his holding to 8700 shares (October 6th), and

Hugh Adlington, at Rathbones Investment Management London, has sold 10,000 shares at 987p, taking his holding to 44,000 shares (October 3rd).

Over the last couple of weeks w’ve seen two directors selling shares in RBS (RBS, 214p):

Non exec Lawrence Fish sold 140,000 shares at 223.36p on September 22nd. This takes him to 182,309 shares. He had bought 119,000 shares in the June capital raising at 200p per share.

General Counsel and Group Secretary Miller McLean sold 60,000 shares at 248p on September 10th. He bought 526,000 shares in the June offer.

McLean owns over 1.3m shares in RBS, and Fish was recently apponted a non exec in May this year, having previously held an Executive position.

Are these share sales significant? Not yet.  

Find other posts on RBS here.

I wondered why Rob de Groot, EVP at Reckitt Benckiser (RB., 2724p) had been buying so aggressively (GBP 3m+ in last two weeks) whereas Bart Becht has been selling.

If you look through the Annual Report, you’ll see that it is group policy for senior management to hold shares, thereby aligning themselves with shareholders. EVPs have to own 200,000 shares before they get any options or performance awards. 200,000 shares is a lot of $$, over GBP 5m at current prices. De Groot was appointed to EVP position in July 2008.

Just imagine how the attitude to risk would have changed if you had had to do that at Lehman, Bear or Merrill !!

Bart Becht has been selling down his exercised options. He exercised 600,000 options in June, and has sold 200,000 shares since. I’m sure he has more to go.

Neither of these sets of transactions can be used as signal on which to predict future share price performance.

Axis Shield (ASD, 307p) (website) is an old favourite of mine. I met the company, and at the same time noticed directors buying in Spring 2005 at prices almost double where they were a year earlier. The stock then continued to perform, moving up 50% within months.

Now I see that Erik Hornnaess, a non exec director but previously Chairman of Axis before their merger in 1999, has been buying shares which have outperformed the market by 40% so far this year.

Between September 3rd and 15th, Hornnaess has bought 20,000 shares at 320p, taking his holding to 125,961 shares. Four of his colleagues had earlier this year (January to April) also bought shares, all around the 270p level. They are Keen (non exec Chairman), McAndrew (previously non exec Chairman), Hermansen (CFO) and Gilham (CEO).

Signal strength: MEDIUM

This is a small cap company with a market cap of only GBP 150m. Be patient and you will be rewarded.

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September 2008