You are currently browsing the daily archive for September 21, 2008.

Wow. Aren’t you exhausted? What a week that was. Thrilling too. You never knew what was going to come at you next!

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We’ve seen a few sells this week. Stocks worth noting for directors selling activity are Savills (SVS), De La Rue (DLAR), and Hargreaves Lansdown (HL.).

Savills (SVS) directors have been a pretty good signal for future share price performance, but the disclaimer must be ‘the past is no guide to the future, you can lose everything in the stock market’. On the positive side availability of capital should lead to some pick up in activity in real estate, on the negative side look at Savills huge cost base.

Hargreaves Lansdown (HL.) directors say ‘Volatility will impact profit growth’. CFO and Head of Accounting have been selling.

De La Rue (DLAR) CEO and CFO both sold this week, taking profits in a stock which is up 50% relative to the FTSE 250 index. Maybe the good news is all in the price.

On the buy side:

Shire (SHP) directors have been consistent buyers. They have a track record. And five of them are buying. Definitely worth a look.

New World Resources (NWS) fall of 50% in the last three weeks has prompted a number of directors to buy. This coal miner and coke producer is, of course, highly vulnerable to a slowdown in economic activity. The directors seem to be more confident than the stock market.

Heritage Oil (HOIL). We’ve seen a number of buyers in small oil companies over the last two to three weeks, including ROC, Arawak, Heritage, and Serica. This may signal a support level for the energy sector.

And what about Prudential (PRU)? Mark Tucker CEO invested GBP 100k on Monday 15th September at just shy of 500p. He bought 20,000 shares taking his holding to 1.5m shares. I don’t interprete this transaction to be a valuable signal as

    1. Only Tucker is buying, no other directors, and
    2. This is a tiny increase in his existing holding. 

Granted, he is up 20% on GBP 100k in a week. Time will tell.

Enjoy the week ahead. Keep calm and think of the long term.

See also April 8th comment- closing positive view with 79% relative return.

Almost every time I’ve looked at directors dealings over the last few weeks I spot a small resources company. This time it is Heritage Oil (HOIL, 253p).

Heritage initiated a London listing in April this year, trading around the 300p mark, before heading up to a high of 350p in June and a low of 190p in August.

Non exec directors Michael Hibberd and Gregory Turnbull each bought 50,000 shares on 5th September at 215p and 212p respectively.

Hibberd followed this up with a further purchase of 75,000 shares at 182p on September 16th, taking his holding to 125,000 shares (plus options on 1.15m shares). Turnbull now holds 350,000 shares (and options on 600,000).

Good news? Each investing GBP 100k-250k. Two directors. decent percentage of existing (Hibberd new position and Turnbull 17%). But I’d like to see more directors buying for this to get a ‘STRONG signal’ rating.

Signal strength: MEDIUM

Just as the central banks are ramping up the printing presses, and De La Rue (DLAR, 948p) declare a ‘strong order book’ and ‘operating cashflow remains strong’  in their pre close statement on September 16th, the CEO Leo Quinn and CFO Stephen King reduce their holdings substantially.

The statement reads fairly positively, but the one thing missing is any comment on costs. Maybe those haven’t been added up yet. 

Stephen King, CFO, on September 18th sold 36907 shares at 920p, raising GBP 340k. These are the balance of the shares he exercised in July, having sold about 25,000 to pay the tax due. He is left with 46620 shares.

Leo Quinn, CEO, on September 19th sold 78500 shares at 948p, raising GBP 740k. This leaves him with 126,000 shares.

De la Rue looks to be ‘up with events’, having outperformed the FTSE 250 by 50% in the last year. I think King and Quinn might have a point here.

Value of directors dealings as a signal for investors: STRONG.

New World Resources (NWR, 900p) is a Czech and Central European coal miner, producing coking coal and thermal coal.

NWR has a secondary listing in London, and caught my attention last week when two directors bought GBP 30k-40k each at above 1050p. They were followed this week by three more, investing GBP 35k to GBP 250k each, a not inconsiderable sum, at prices between 718p and 940p.

The stock has halved since they produced interim results at the end of August (link to company website). I shalln’t [how do you spell this word] attempt to analyse the results, but the main two points were a huge jump in operating cash flow (172%) due to prices, and a big jump in costs (15% underlying).

Conclusion: Five directors buying (2 execs, three non execs), good size (GBP 35k to 250k), and a significant increase in shareholding (25% to 100% of existing holding) warrant a STRONG signal.

Risk factors include: secondary listing in London, relatively recent IPO (May).

For the official announcements of directors dealings in NWR go to the London Stock Exchange ‘Market News’ website, and type ‘NWR’ in the ‘name/code’ box.

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September 2008