You are currently browsing the daily archive for November 26, 2008.

On October 12th I pointed to Xstrata (XTA, 862p) non execs purchases as an early positive (although not strong) signal for Xstrata “Xstrata non execs catch a falling knife”.

I was particularly impressed by the volume and timing of selling by Xstrata management earlier in the year:

“If we look back to earlier this year, a number of executive directors including Trevor Reid (CFO), Santiago Zalmdumide (Executive Director), and Michael Davis (CEO) all exercised options and sold all their shares at between 3470p and 4342p (source: Company website, Digitallook, London Stock Exchange)” .

Since October 12th Claude Lamoureux (non exec) has invested another GBP 50k or so by buying 5000 shares at 1093p (November 7th), and David Rough (non exec) has bought 3000 shares at 681p (November 21st).

I use this post only as an opportunity to highlight Mr Roughs investment skills:

Rough sold 3605 shares in Xstrata at 3508p in March 2008.

Rough bought 3000 shares in Xstrata at 681p on November 21st 2008.

David Rough has an extensive history in investing, retiring in 2001 from his position as Chief Investment Officer for Legal and General, but maintaining non exec positions at Xstrata, Land Secs and Friends Provident.

Mr Rough, who joined L&G from Royal Insurance in 1989, earned a reputation for being almost alone among fund managers in openly criticising companies or institutions for treating shareholders in a shoddy way. He is also credited with being behind the fast growth of L&G’s fund management arm, which has expanded from £18.5bn to £113bn in the last 10 years and was adding £1bn a month by last year. (Independent October 19 2001).

View on Xstrata- remains positive – directors buying.

Strength of signal- MEDIUM- three non execs buying shares. Will turn to ‘strong’ when we see an executive director buying shares.



jonathan-davieI’m sure Jonathan Davie wouldn’t appreciate the term ‘veteran’, but having entered the world of stock-jobbing with the firm of George Hill on the Stock Exchange floor in 1969, I’m happy to classify him as one of the more experienced men working today, with three, now four, bear markets under his belt.

I’ve worked with Davie, the Non Executive Chairman at IG Group (IGG, 211p) before. Apart from being a charming gentleman, he knows the markets well, and has unbridled passion for them too.

So his purchase of 90,000 shares in IG Group at 183p last week, post the pre close update, results in IG going on my watchlist. Davie now owns 1m shares in IG, so on a relative basis this is just a toe in the water for him.

Davie sold 880,000 shares when the going was good, between October 2006 and March this year, at an average price of 311p. He was bettered in his sales only by his Chief Operating Officer Peter Hetherington, who sold almost 40% of his holding, or 1m shares, at 400p in October 2007, within 7% of the all time high achieved the same month.

The press and the market were pretty critical of IG’s pre close statement last week, with the shares falling by almost a quarter. Of particular concern was the leap in bad debts, which IG said “relate to a small proportion of the client base”, and 80% of them were said to occur in the October mayhem (Telegraph Questor November 20th). Could this repeat itself? Sure, why not. But I’m sure IG have learnt from this. 

What would I like to see to become more positive?

1. Davie buying more shares. He realised GBP 2m through his sales, and has reinvested less than 7% of that.

2. COO Peter Hetherington buying shares. He gets full marks for selling at the top. I’m happy to wait for his buy signal too.

View on IG Group- Positive, director buying shares

Strength of signal- Weak, only one director buying, and in relatively minimal size.

IG Group go on the watchlist.

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November 2008