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The CFO of Tesco (TSCO, 365p), Lawrie McIlwee, last Thursday May 28th sold 36,282 shares in the multinational retailer at 370p, taking his holding to 18,000 shares.
We remembered some other recent sales, as a result of Options Exercises. In both cases all of the shares exercised were sold, which we interpret as negative on the basis that it results in a net sale of shares. If the directors had sold only sufficient shares to pay their tax and national insurance liabilities, then the transaction would be viewed as neutral.
On May 12th the IT director Philip Clarke exercised and sold 332,000 shares at 351p, leaving his holding unchanged at over 650,000 shares.
On May 19th Tim Mason, the President and CEO of the US operation, Fresh and Easy, exercised and sold 247,000 shares at 355p, leaving his holding unchanged at 678,000 shares.
View on Tesco: Negative (Directors selling shares)
Strength of Signal: Strong
(source: London Stock Exchange)
We made some money out of Experian (EXPN, 474p) after buying in November 2007 following directors purchases. We took profits in December 2008, follwing a share sale by non exec David Tyler, recording a 50% outperformance relative to the FTSE 100 share index.
Since then however, Experian shares have continued to perform well, rising by 13% with the market only just in positive territory, rising a paltry 1.6%.
Two transactions on May 20th and 21st have caused us to be more cautious on Experian:
- John Peace, the Chairman, has exercised options over 353,000 shares and sold them all, realising 1.75m pounds. He maintains his position at 1.1 million shares.
- David Tyler, the non exec who sold shares in December, has sold a further 100,000 shares at 479.55p.
View on Experian: Negative, Directors selling shares
Strength of Signal: Strong
Wow- ‘Liberty undermined by fundraising chatter’ (Independent)’ (LII, 365p)
Sounds very underhand to me.
But wait – only a month ago, Liberty International announced results and said they ‘intend to take further action to improve our liquidity and financial strength, including potential further asset sales and new capital raising’ (February 26th Liberty International Preliminary Results announcement).
Judging by the share price since then, the bears have been covering their shorts (Liberty up 15% from Feb 25th to last night, FTSE unchanged) , and we are reminded through market gossip that the capital raising is imminent.
The cynic in me says that Goldman are not involved, hence the move to a SELL with a target of 302p (Independent article). Where were you Goldman when the price was near 1000p in August last year, and senior management of Liberty were selling shares?
Since our note on August 31st (link below), Liberty International are down 62% in absolute terms, or down 44% relative to the FTSE 100 index.
The ‘directors selling’ signal was reinforced in January 2009, when we saw Harold Newton and William Black selling shares.
Hopefully all will be revealed in the next few weeks, maybe as soon as the Company’s EGM on April 1st (EGM notice here).
Look for opportunities to close the negative view on Liberty International below 300p.
Click here for all Followthedirectors comments on Liberty International:
January 11th, 522p: Liberty International shares continue to be vulnerable
August 31st, 984p: Liberty International- PDMR selling
February 20th, 958p:Liberty Internationals Gordon buys shares. So what.
On September 30th last year, with MAN above 300p, we saw directors of MAN Group plc (EMG, 219p) buying warrants at around 57p, rather than buying the shares outright.
Probably a good thing really, as MAN Group shares lost 40% of their value in the following six weeks, more than twice the 57p paid for the options.
For our comments on MAN Group in September, read ‘MAN Group Directors step in to buy after results announced’ (WEAK signal).
So what now with the reorganisation and renaming of funds?
With no new directors purchases since September last year, I’m happy to stay on the sidelines here. If management don’t feel the shares offer value, with a yield above 8%, then why should you.
I’d agree with Tempus here, ‘A buy for the brave’, but let the MAN directors show their courage first!