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.