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Barratt (BDEV, 80.25p) directors have been actively buying into the group since November, initiating or significantly increasing their personal holdings as follows (Source: London Stock Exchange):
- November 18th Robert Lawson, Non exec Chairman, bought 151,000 shares at 65.3p, and now holds the same amount.
- November 20th Mark Rolfe, Non exec director, bought 30,000 shares at 62p, and now holds the same amount.
- December 19th Mark Clare, CEO, bought 357,000 at 69p, taking his holding to 529,000 shares.
- December 19th Mark Pain, CFO, bought 60,000 at 74.8p, taking his holding to 100,000 shares.
- December 23rd Stephen Boyes, Executive Director, bought 65,000 shares at 76.4p, taking his position to 107,000 shares.
Between them these directors have invested GBP 450k, at a time of great uncertainty in both the stock and property markets.
Barratt have however impressed the market with recent results, showing an impressive ability to generate cash and pay down debt, as well as reduce costs by shedding 60% of their employees.
The group today warned of margins being squeezed, and therefore unlikely to meet brokers estimates [ which is probably near term and pretty irrelevant to the long term viability of this business] (FT article).
What matters with this group is that directors are actively buying, and they appear to be managing the economic problems quickly and positively.
On November 8th 2007 (‘Housebuilders- too early to buy’), with Barratt above 500p, we warned of downside in the sector as a result of seeing significant directors share sales at Savills. I’m happy now to be looking for opportunities to invest in Barratt for the longer term below 75p.
View on Barratt Developments: Positive
Strength of signal: Strong (caveat: must be viewed long term ).
The CFO of John Wood Group plc (WG. , 185p), Alan Semple, yesterday bought 50,000 shares at 166p, taking his holding to 1.164m shares.
Whilst this of itself is not significant, there are a few factors which continue to support a positive view on John Wood :
- Semple sold 92,000 shares in April this year at 453p. This is his first transaction since then.
- Sir Ian Wood, Chairman, also invested in John Wood last week, buying 500,000 shares at 164p on December 5th, taking his holding to 31.1m beneficial and 60m non beneficial.
- Six other directors have bought shares, in October. In total 8 directors have bought 1.296m shares in the last six weeks, investing over GBP 2m between them.
- The ‘Full year trading update’ is to be announced on the 17th of December.
Our last comment on John Wood Group was on October 28th at 179p ‘Four directors have invested over GBP 1m in the last week’. Within a week John Wood shares were trading 100p higher, helped by a big bear market rally.
I expect a positive, reassuring statement next week.
Positive view, encouraged by a STRONG signal.
Sources: Company website, London Stock Exchange, Digitallook
Griffiths
This is the man who called the Stagecoach (SGC 140p) share price absolutely right. Yes, that’s right, the CFO Martin Griffiths.
Since July 24th (see copy of note below) Stagecoach shares have halved in price, and are down 37% relative to the FTSE 100.
Following the recent results (‘Stagecoach to cut jobs as recession looms’– Bloomberg) I am closing my negative call with a 51% absolute return.
Can I point out to shareholders that on October 29th the company announced in their Trading Statement that ‘the outlook for the Group remains positive’ (Source Stagecoach Group website).
I might be so bold to suggest that Mr Griffiths ‘outlook’ expectation must have differed substantially from the markets interpretation of a ‘positive outlook’, and that Stagecoach failed to acknowledge and relay this difference to the market in an appropriate way. Why else would Stagecoach’s share price be down 32% since the October 29th Trading Statement?
But Griffiths’ real skill was selling shares on the realisation that things couldn’t get any better. People switching to public transport, fuel prices starting to come down, premium valuation due to ‘non cyclicality’ of the business.
Addendum Friday December 5th: Stagecoach yesterday announced two share purchases by directors as follows:
Non exec Sir George Mathewson (of Scottish banking fame) bought 35,000 shares at 139.39p on December 4th, initiating a holding.
CEO Brian Souter bought 2.085m shares at 138.96p on December 3rd, taking his holding to 106 million shares.
These purchases do not yet warrant a positive view on the stock, as in % terms Souters is too small as a proprtion of his existing position, and Mathewsons position as a proportion of his net wealth must be assumed to be very small.
Followthedirectors.co.uk Note of July 24th 2008:
”Stagecoach – CFO Griffiths thinks it’s time to take profits‘
Martin Griffiths, CFO of Stagecoach (SGC 275p) is taking his money off the table.
As at the beginning of June he held Executive Share Options over 479,000 shares, with varying exercise periods, starting in June and December 2006 and December 2007, and extending mostly to June 2010, with some as far out as December 2011 (Annual report).
Griffiths exercised all 479,000 between 26th of June and 8th July this year, which cost him £365k.
He sold all of them them on the same dates, realising £1379k, a net £1m in his pocket.
Why do I think this significant?
- He had another 2-3 years before he needed to exercise these options, but chose to exercise and sell now.
- This 479,000 shares is the total amount in his Executive Share Option pot*. Griffiths today owns less than 20,000 shares.
- When exercising options, directors usually sell sufficient to pay the tax man and hold on to the rest. Not in Griffiths case. He has exercised and sold the lot.
Griffiths behaviour and the subsequent risk profile of his remaining ‘Plan’ shares indicates to me that the risks to the Stagecoach shares outweigh the medium term returns. So I’d follow Griffiths and take some money off the table too.’
I’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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