You are currently browsing the daily archive for September 15, 2008.

I want to revisit Shire (SHP, 911p).

In February David Mott, a non exec with a great pedigree, initiated a position in Shire by investing GBP 150k, saying ‘Shire is one of the most interesting companies in the industry with an impressive recent track record of launches and an equally exciting pipeline’ (see ‘David Mott- puts his money where his mouth is‘).

Last Thursday, Mott committed almost the same amount of cash again, doubling his holding to the equivalent of 30,000 ordinary shares in Shire, by buying 5,000 ADS at $48 (equivalent to buying 15,000 ords at 910p).

I also find other recent purchases:

August 6th Graham Hetherington, CFO, buys 4000 shares at 896p taking him to 56,000 shares.

August 5th Matthew Emmens. Non exec Chairman,  exercises options on almost 40,000 shares at an average price of around 430p. He would normally need to sell roughly 40% of these shares to pay for the tax liable, but is not doing so, so I consider this transaction to be a net investment by Emmens.

August 1st Michael Rosenblatt, Non exec,  bought 1155 shares at 800p

June 13th Aungus Russell, CEO, bought 6000 shares at 804p

If I then look back further to see if directors have historically bought and sold at the ‘right’ times, and I find the following:

I see directors were buyers at 868p to 888p level in September 2006.

Then from November 2006 to September 2007 they were net sellers (exercised options and sold almost all the shares) in range of 1056p to 1270p (shares peaked at 1310p in August 2007)

And now they are buyers again, as from February this year, in range of 804p to 998p (shares troughed at 745p on July 16th).

With the observation of ongoing buying activity in decent $$ amounts, as well as having several directors buying over a short period, I believe the ‘signal’ given by directors dealing activity in Shire Ltd should move from WEAK to STRONG.

Over a tense weekend for the 25,000 employees of Lehman, praying for a rescue package, I spot further director selling at Hargreaves Lansdown (HL., 191p).

On September 9th we saw the CFO Martin Mulligan and his Accounting colleague Tracy Taylor selling down less than 10% of their holdings.

On September 11th the Group Compliance Director Nigel Bence sold almost a third of his holdings, selling just over 250,000 shares held in his and his wifes name, to leave them with 561,207 shares.

HL were up more than 50% from their low. With equity trading volumes falling and the US heading for months of financial turmoil as a fallout from the (likely) collapse of Lehman (FT comment), I consider the risks lie substantially on the downside, and suspect Bence, Mulligan and Taylor would agree with me. As management concluded in their results presentation last week: ‘Volatility will impact profit growth’. That volatility is not yet receding.

For my last comment on Hargreaves Lansdown of September 12th ‘Volatility will impact profit growth’ see here.

With a third director selling, I now consider the value of the ‘signal’ from directors dealings to be STRONG.

Addendum Sept 24:

Further selling by CFO Martin Mulligan (sold 142k shares at 202p 19/9) and Head of Group Accounting Tracy Taylor (sold 30k shares at 200p-204p 22/9) reinforce the signal on Hargreaves Lansdown.

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September 2008