You are currently browsing the daily archive for February 8, 2009.

sagelogo80 Sage directors have not been great fans of the company shares for a while now, transacting only share sales, no purchases, over the last twelve months.

Most notable for their timing were sales by the Group CFO and the CEO of Mainland Europe and Asia, in September 2008 at 190p, just before the shares along with the rest of the stockmarket collapsed into a hole. The share sales were made after exercising options, but I view the sale of all 100% of the shares exercised as a negative signal. For a neutral view, directors would sell only sufficient shares to pay for their tax liability on the options exercise, usually around 40%.

Sage last week announced results. The Wall Street Journal commented that ‘ trading in the three months to Dec. 31 had met its expectations, but its shares fell amid concerns over its U.S. performance and uncertain outlook’ (February 4th)

Sage (SGE, 178p) on Friday announced that Guy Berruyer, the CEO of Mainland Europe and Asia, had sold 75,000 shares at 176p, taking his holding to 240,000 shares. I view this as a negative signal, and adopt a cautious view on the shares.

View on Sage: Negative

Strength of Signal: Medium

Miguel Ramis, Compass’ Head of European Operations, not a board director, but an individual of PDMR (person with direct management responsibility) has sold 120,000 shares at 355.89p leaving him with 548,000 shares (London Stock Exchange February 6th 2009).

Compass Group (CPG, 355p) have been a wonderful outperformer relative to the market, up 50% since we turned positive on the shares on March 18th (‘followthedirectors: The Compass points North‘) as a consequence of share purchases by Roy Gardner the Chairman, and Richard Cousins the CEO.

If you remember, the market had concerns over food price inflation, and whether or not Compass would be able to recover increased costs in their contracts.

The company statement announcing Ramis’ share sale describes him using the proceeds ‘used in repect of settlement of the specific lending obligations‘.  Doesn’t that mean he’s paying down a loan?

I interpret this as a lame excuse for his share sale, and I am happy to take profits on shares bought in March at 309p, a performance 50% better than that of the FTSE 100 index.

View on Compass Group: Negative

Strength of Signal: Medium

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February 2009