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Babcock’s (BAB, 443p) CEO Peter Rogers on November 11th invested over GBP 100k in the group, buying 25,000 shares at 412p after announcing Interim results, taking his holding to 125,000 shares.

I would normally discount this as an investment signal, needing to see him supported by other directors before I bought the shares for myself.

Then I looked at the historical directors dealing activity in Babcock using Digitallook (website), which took me back to 2002.

There are a couple of interesting points to make:

  1. There appear to have been a total of only 17 directors transactions over the last six years.
  2. Only five directors have been active.
  3. Rogers purchase is the first significant purchase by ANY director in four years.
  4. The directors track record looks pretty convincing.

Rogers last bought shares in August 2004, when he paid 106p for 80,000 shares. In September 2002 he paid 102p for 20,000 shares.

In June 2007 Rogers sold 253,000 shares at 547p.

His colleague Gordon Campbell, then Executive Chairman, sold around 300,000 shares between March and September of this year, scoring a bullseye when he sold some of his shares within 7p of the alltime high of 647p in June 2008.

Rogers isn’t completely alone in his purchase. CFO Bill Tame bought 3162 shares at 474p on September 30th 2008, taking his holding to 29,351 shares.

In view therefore of the excellent track record and the sporadic activity, I’m suggesting that Rogers’ transaction of Tuesday is a significant signal for potential investors in the group. Ideally I’d like to see Rogers putting more of the GBP 1.4m he raised in June 2007 back in to the shares, as well as investments by other directors.

I would caution though that he clearly takes a long term view, holding the shares he bought in the low 100’s for between three and five years, quintupling his money in the process.

View on Babcock International Group: Positive- CEO and CFO buying shares

Signal strength: STRONG – excellent track record, but need to take long term view.

From November 2007 to September 2008, directors of TT Electronics (TTG, 45p, Small Cap)  bought roughly 200,000 shares.

In October 2008 the activity accelerated, with five of the groups seven directors buying over 1.3m shares.

The directors dealing activity exhibited other favourable characteristics such as a significant % increase in shareholdings of the directors who bought shares.

John Newman, Chairman, bought 1.25m shares at 47p taking his holding to 10.8m shares.

Shatish Dasani, CFO, bought 35,000 shares at 48p, taking his holding to 100,000 shares.

Sean Watson, a non executive director, bought 55,000 shares at 46p, taking his holding to 62,000 shares.

David Crowther, another non exec, bought 20,000 shares at 47p, taking his holding to 40,000 shares.

James Armstrong, the Corporate Development Director, bought 21,000 shares at 44p, taking his holding to 71,000 shares.

TT make sensors and systems for the defence, aerospace, automotive markets, as well as telecoms and industrial electronics (company website). 

This rings a bell to remind us of the aggressive directors buying in the engineering stocks (see ’25 directors buy shares in UK engineering companies‘ October 28th           ).

Next news? With a December year end, we may see a pre close statement in the week before Christmas.

View on TT Electronics: POSITIVE- Directors buying shares

Strength of Signal : STRONG– Five directors buying, average incraese in position above 50%, in the region of GBP 500k invested, potential good (reassuring might be more appropriate in these times) news ahead.

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November 2008