‘Bodycote (BOY, 118p) is the world’s largest and most respected provider of testing and thermal processing services: Heat Treating, Hot Isostatic Pressing, Metallurgical Coatings and Testing – operating in 30 countries’ (strategy page on co website).

Four directors have bought shares in the last two months, and the CEO has exercised options over 148,000 shares (at a premium to todays price).

Between them and a PDMR they have bought around 132,000 shares in the market, and 148,000 shares via the options (CEO), investing over GBP 400k. Purchases and options exercises have been made between 114.88p and 206p over September and October 2008 (source: London Stock Exchange Market News website, type in BOY for all Bodycote news)

Why?

April 2007: Bodycote rejects fourth takeover bid from Sulzer (Times 20th April 2007) (stock reached high of 325p in March 2007)

October 2008: Bodycote announces completion of sale of Testing business for GBP 417m (October 17th 2008, company website)

Today: Bodycote shares now trading at 118p and have a market cap of GBP 380m.

Do you think Sulzer might come back for Bodycote? I don’t know Sulzers strategy or their financial position. Maybe you should ask somebody that does. But the directors clearly believe, as shown by their actions, that Bodycote shares are cheap.

View on Bodycote: Positive- Directors buying

Strength of Signal: Very STRONG. 5 out of 6 directors buying shares, significant $$ investment, company has a history of bid activity.

See also ’25 directors buy shares in UK engineering companies’ (October 28th followthedirectors.co.uk)