I’m back from my hols. The last time I went sailing I returned to find my portfolio hit by close on 50% due to a severe inventory shock at Nokia handsets. This time it’s probably almost as bad, although I haven’t dared log in to check yet.

I’ll warn you the next time I’m on the water!

I notice that Cairn Energy (CNE, 1582p) directors have been buying shares (see Sharecast article ‘Cairn Energy Bosses buy in’ here). If you look at the purchases though, you’ll see that although between them they invested GBP 480k, the directors have increased their position sizes by less than 10%. This is not sufficient to warrant a STRONG signal with a positive angle, but would warrant a MEDIUM signal due to the high number of directors buying (seven in total).

Lets now go back to April 7th this year, when I wrote ‘Cairn Energy- non execs reduce holdings substantially’. Four directors had sold shares, including the CEO Gammell and the director of exploration Watts (read the full article by clicking on the link above). The big important message to the market was provided through share sales by non execs Murray and Hart who sold between 1/3rd and half their holdings

Back then the share price was 2915p. Cairn are now 1582p.

That is a fall in the value of Cairn Energy shares of 45%. Over the same period the FTSE 100 index is down by 25%.

So if you listened to the directors message (not mine- it’s the directors that sold shares, they provided information to the market through their actions) in April, and sold your Cairn shares, I’d be happy now to close that short/sale with a 45% return.

Thankyou Norman Murray and Todd Hart.

Signal: directors buying = positive

Signal strength: MEDIUM ( many directors buying but insufficient size to warrant a Strong signal)

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