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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