You are currently browsing the daily archive for February 2, 2009.

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

So Yea was right, again.

Yea, until last week the CEO of the UK venture capital group 3i (III, 219p), sold GBP 500,000 of shares back in July 2008 at 823.5p (see ‘3i- Hooray for Yea- now take profits‘-followthedirectors.co.uk July 23rd)

3i shares are now trading at 219p, a fall of 76%. The FTSE 100 index has fallen over the same period by 24%. In my calculations that means that 3i have underperformed the index by around 67% since July last year, when Yea sold his shares.

Last week 3i announced a new CEO, Michael Queen. Queens appointment was swiftly followed by a raft of directors purchases, which may have some significance (see below).

I’m always a little wary of these sort of directors dealings. Are they expressing their support for the incoming CEO, or do the directors think they can make money by buying shares ahead of significant cost cutting announcements or changes in strategy?

As a result of my concerns I’m only going to give these signals a MEDIUM rating, pending further director buying activity. But having said that, I’m happy to close my negative view on 3i, and to take some very nice profits.

View on 3i: POSITIVE

Strength of Signal: MEDIUM

For all posts on 3i click here.

Directors purchases (source London Stock Exchange):

Michael Queen, CEO, bought 100,000 shares at 216.6p, initiating a position. Jan 30th.

Willem Mesdag, Non exec, bought 25,000 at 210p, initiating a position (I estimate). Jan 29th.

Guy Zarzavatjian, PDMR, bought 305,000 at 210.7p, postion unknown. Jan 29th.

Lord Smith, Non exec, bought 5,000 shares at 213p, taking his holding to 9500 shares. Jan 29th.

Robert Swannell, Non exec, bought 4,000 shares at 210.3p, taking his holding to 17,000 shares. Jan 29th.

Baroness Hogg, Chairman, bought 5,000 shares at 213p, taking her holding to 5,000 shares. Jan 29th.

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)

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