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On November 26th, ‘Market veteran buys back into IG Group‘, we analysed Jonathan Davies’ purchase of 90,000 shares in IG Group (IGG, 280p) at 183p as a buy signal (although a WEAK one: solo buyer, small % increase in holding).
Since then IG Group are up 37% absolute or up more than 30% relative to the market.
Now we see that last week Peter Hetherington, IG Groups Chief Operating Officer, sold 700,000 shares at 284p, taking his holding to 976,000 shares (January 28th, 29th, source London Stock Exchange).
Hetherington has an excellent track record. He 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.
View on IG Group: Negative. Take profits on any purchases of November 26th.
Strength of Signal: STRONG
Between January and May last year, the CEO of easyjet (EZJ 301p), Andrew Harrison, doubled his position in the group by investing almost GBP 1.2 million ( ‘Harrison accelerates buying of Easyjet‘- followthedirectors, May 29th 2008).
Now Harrison has almost halved his position by selling 400,000 shares at 326p (January 28th, London Stock Exchange), leaving him with 438,000 shares.
Harrison bought easyjet shares when we were all panicking about highly inflationary oil prices. Oil peaked within two months of Harrisons share purchase, and easyjet shares outperformed the FTSE 250 by more than 60% from May 29th to now.
Is this directors share sale an important signal?
Yes, certainly for easyjet shareholders who have substantially outperformed the market, and in absolute terms are flat on the May 29th level, quite a remarkable achievement in these turbulent times.
And maybe even for Crude oil watchers.
Either costs are going to start rising at easyjet, or yields are at risk, despite what the company says in their statements ‘easyjet sees better H1‘ (Reuters January 22nd).
View on easyjet: Negative
Strength of Signal: Strong (track record, size and % of share sale)
