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Over a tense weekend for the 25,000 employees of Lehman, praying for a rescue package, I spot further director selling at Hargreaves Lansdown (HL., 191p).
On September 9th we saw the CFO Martin Mulligan and his Accounting colleague Tracy Taylor selling down less than 10% of their holdings.
On September 11th the Group Compliance Director Nigel Bence sold almost a third of his holdings, selling just over 250,000 shares held in his and his wifes name, to leave them with 561,207 shares.
HL were up more than 50% from their low. With equity trading volumes falling and the US heading for months of financial turmoil as a fallout from the (likely) collapse of Lehman (FT comment), I consider the risks lie substantially on the downside, and suspect Bence, Mulligan and Taylor would agree with me. As management concluded in their results presentation last week: ‘Volatility will impact profit growth’. That volatility is not yet receding.
For my last comment on Hargreaves Lansdown of September 12th ‘Volatility will impact profit growth’ see here.
With a third director selling, I now consider the value of the ‘signal’ from directors dealings to be STRONG.
Addendum Sept 24:
Further selling by CFO Martin Mulligan (sold 142k shares at 202p 19/9) and Head of Group Accounting Tracy Taylor (sold 30k shares at 200p-204p 22/9) reinforce the signal on Hargreaves Lansdown.
I’ve looked at the Hargreaves Lansdown (HL. , 190p) share price performance since the results on August 27th. The shares moved from 161p to a high of 209p, and are now off the top at 190p.
So a more than 25% uplift after a great set of results (to June 2008). Of note was an increase in assets under management, and an increase in the proportion of income that is recurring, up about 4% points to 72%.
I then looked at the slides from the analyst presentation, and recount here from the ‘Conclusion’ slide:
‘Resilient business’
‘H-L is well positioned in the market’
‘Volatility will impact profit growth’
‘….but long term prospects remain very positive’.
I also notice a comment on FT’s Alphaville quoting a Citigroup report that shows a marked slowdown in global stockmarket activity n August, down 37% in value vs last year.
And I then understand why on September 9th the CFO of Hargreaves Lansdown Martin Mulligan has taken some money off the table by selling 200,000 shares at 193p, taking his holding to 2.1m shares. His colleague Tracy Taylor, Group Accounting Director and Co Secretary, has also sold, 65,000 shares at 193p taking her holding to 932,000 shares.
Of note is Mulligans past trading activity. He sold 1.2m shares in September 2007 at between 208p-210p. HL shares subsequently fell to 135p in January.
So maybe ‘volatility will impact profit growth’ is the line to focus on for the next six months.
Signal strength: MEDIUM
Link to Hargreaves Lansdown Investor Relations site.
There’s been a lot of hype surrounding Liberty International (LII, 984p) recently, with two ‘stakebuilders’ active (see Times comment below)
So it is interesting to see an announcement on Friday about a PDMR (senior management) individual exercising options and selling all the shares. ‘Normal’ behaviour across most situations where options are exercised, is to sell sufficient to pay all associated taxes (so around 40% of the exercised shares).
Liberty announced that (PDMR) Harold Newton had exercised 22638 shares, and sold the same number, leaving his holding unchanged at 93010 shares. One implication of this might be that Newton didn’t think it imperative to hold on to the 13,000 shares he didn’t need to sell for tax reasons.
From
August 23, 2008
‘Bid prospect puts new life into Liberty International
Market report
Bid speculation became the dominant theme in a rising market yesterday with much attention centred on Liberty International, the group behind shopping centres including Lakeside and Covent Garden.
Liberty rose 70p to 945p after news that Simon Property Group, one of the largest public real estate operators in America, had raised its stake in the company to 3.45 per cent.
Simon has been gradually and quietly building its stake in the British retail-focused real estate investment trust (Reit) for the past few months, taking advantage of its weak share price, dragged down by plummeting property valuations. This month Liberty reported a 7.4 per cent fall in the value of its portfolio and gave warning that the property market was unlikely to pick up in the near future.
It is understood that the two groups have a close relationship, but it is thought unlikely that Simon’s stake-building will lead to a bid. The 8 per cent rise in Liberty’s share price also reflected a degree of short squeezing as those who had been bearish on the company covered their positions.’
Robert Dickinson, a board member and former President and CEO of Carnival Cruise Lines at Carnival (CCL, 1793p) is using the recent bounce in the share price from a low of 1450p to sell down his holding in the Carnival and P&O cruise line business.
On June 24th he sold 18,000 shares at 1761p, realising £317,000.
On August 1st he sold 40,000 shares at 1864p, realising £715,000.
This leaves him with 160,000 shares in CCL.
Is Dickinson planning a cruise for his retirement, or does he think that the risks are on the downside for CCL ?
August 11th: Carnival announce that on August 8th Howard Frank, Vice Chairman and Chief operating Officer sold 66,000 shares at an average price of $ 39.6159 taking his holding in Carnival to 294,416 shares.
So now Frank and Dickinson between them have taken about $4.5m or £2 1/4m out of Carnival shares in the last 8 weeks. Not a positive indicator for the shares.
The ‘strength of signal’ derived from directors dealings moves from medium to STRONG.
I tend to concur with the Telegraph article of 29th June ‘Carnival shares no safe harbour’. Link to article here.
Griffiths
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.
*Griffiths also owns 166,000 in the Executive Pension Plan (vestable mid ’09 and mid ’10), and the equivalent of 675,000 in the Long Term Investment Plan, but these are subject to Total Shareholder Return criteria as detailed in the Annual Report, and designed to be taken in cash not shares, so you may not find out whether they have been exercised until the next Annual Report.
References:
Stagecoach Annual Report 2008, pp 35-38
In my post of March 6th: ‘3i CEO Philip Yea buys back £1/2m worth of shares’ I commended Philip Yea for his expertise in trading in his own company stock, 3i.
Note now that on July 14th Yea sold 60,831 shares at 823.5p, taking £500k off the table, leaving him with a residual 275,000 shares.
From March 6th to date 3i (III, 930p) are up 22% relative to the FTSE 100.
Time to take profits then. Thankyou Philip.
On March 23rd (BXB A$9.63) I expressed intrigue that a director of Brambles (BXB, 380p), Craig van der Laan, should be selling. See ‘Brambles directors sale- economic slowdown starting to hit?’.
On April 18th (BXB A$9.03) Brambles shares ‘slump’ by 10% after an admission that the supply agreement with Walmart was under review (see Bloomberg news here).
Today (June 2nd) (BXB A$8.10) Brambles declare that van der Laan (Group President of CHEP Asia Pacific) has been selling more shares. Over 26th and 30th May he sold 255,000 shares (in his wifes name) to reduce his holding even further, to 368,000 shares.
June 24th (BXB A$ ??) – Brambles have a scheduled ‘Trading update’. We should expect to be updated on the ‘Walmart contract’. I wonder if van der Laan has any insight into what Brambles will tell us ?
On April 3rd I highlighted Mr Walshes last sale of Diageo (DGE, 1047p) shares (see commentary here).
I was particularly impressed with the fortuitous timing that Mr Walsh seemed to have shown with his previous share disposals.
Since April 3rd, Diageo shares are down 1% absolute, or down 6% relative to the FTSE.
I see no reason that May 9ths sale by Paul Walsh of 125,000 shares at 1040p shouldn’t be a continuation of either his good luck or expert timing.
There’s a plethora of information about directors share dealings in Cairn Energy ( CNE, 2915p) last week.
If you filter out the sales by executive directors of shares released under the Long Term Incentive Plan, and eliminate shareholdings sold and bought back before CGT changes, you are left with four notable changes in holdings:
1. CEO Sir Bill Gammall has sold 50,000 shares taking his holding to 377,000 shares.
2. Exploration Director Dr Mike Watts sold 40,000 shares taking his holding to 160,000 shares.
In my mind both of the above sales are interesting but not hugely significant.
Of greater interest are the sales by Non Executive Directors as follows:
3. Non executive Chairman Norman Murray halves his holding by selling 40,000 shares at £28.61, releasing £1.1m, and
4. Non executive Director Todd Hart reduces his holding by more than a third, selling 10,000 shares to leave him with 18,000.
I believe these sales to be significant, both in value terms, and as a proportion of the directors’ position (holding) in Cairn prior to the sales.
Source: http://www.Digitallook.com
followthedirectors... a study of directors share dealings 