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Dairy Crest (DCG, 551p) non execs have each bought 5,000 shares at 542p.
Why is this interesting?
1. Solid cash flow milk, cheese and yoghurt business – defensive
2. Able to pass on price rises – offer protection against inflation
3. Year end 31 March – soon- good news in the pipeline?
4. Well liked- read Questor (scroll down to the bottom of the page)
5. 27% off their high
6. Rapidly growing home delivery program- milk and more
Non execs David Richardson, Carole Piwnica, and Non exec Chairman Simon Oliver, each invested £27k in Dairy Crest.
This is a relatively safe, defensive investment, with good news ahead.
It’s interesting to see over the last week or so directors at Halfords (HFD), Woolworths (WLW), N Brown (BWNG), Instore (INST) and Kingfisher (KGF) add to their holdings.
Buys in the General Retailers sector over the last month took place at 14 companies (net 1 month, over £50k, source digitallook), with no companies reporting director sales. This compares with data showing, over the last twelve months (same criteria over total of twelve months), 32 companies with net buys, and 14 with net sells. I believe this to be a significant indicator for the sector, however when looking at individual companies the ‘value’ of this signal is not so clear.
In analysing directors dealings I look for a change of attitude (ie from buy to sell or vice versa) and a historically successful track record in dealing by directors of the company.
Kingfisher (KGF, 133p) Ian Cheshire, CEO, added to his holding this week by buying 268,000 shares at 148p. But he also bought stock in October ’06 at 256p. Is he averaging down, or is this a vote for himself, having taken on the CEO position on January 28th?
N Brown (BWNG, 243p) shows the CEO buying 150k at 240p, but the CFO selling 56k shares at the same price. So in my mind they cancel each other out.
However at Halfords (HFD, 276p), two non execs bought a smallish amount of shares at 269p. This is Wilsons first foray, and Pym, Halfords Chairman, increased his position by about 50%. What is interesting is that Pym bought stock in June 2006 at 289p, also 10,000 shares. Halfords share price then ran to 411p in July 2007, which incidentally is where CEO Mcleod sold a significant block of stock.
I’d like to see more buying from Halfords directors before throwing myself into this one. But Halfords should be added to the watchlist.
‘EasyJet slides as planes fly with empty seats’
Easyjet shares have recently taken a nosedive, prompting four directors to increase their holdings by a significant amount (Michels- Non exec, Browett- Non exec, Chandler- Chairman, and Harrison- CEO).
It is the Chairman, Sir Colin Chandler, who has the best track record. He has bought stock three times in the last five years. Within 10-12 months of his purchase, on each occasion, the share price has appreciated by between 70% to 110%.
February 2003- paid 205p. easyjet shares traded at 370p 10 months later.
August 2004- paid 140p. easyjet shares traded at 300p 12 months later.
February 2006- paid 378p. easyjet shares traded at 650p 10 months later.
January 2008- paid 424p.
OK, so Chandler never banked his profits. But from the evidence above he clearly recognises a buying opportunity. An example I’m happy to follow.
When I looked at Director share activity in the Real Estate back in early January, I found that buys outnumbered sells by 4:1 (source digitallook. using net director activity over 1 month. cut off £50k).
I find on my return from holiday that this has now accelerated to 10 buys vs 0 sells. Admittedly these are smaller caps such as Warner (WNER), Big Yellow (BYG), and Hansteen (HSTN). However I strongly believe that this behaviour reinforces our earlier call to buy the sector (November 25th- Real Estate Sector- directors are buying).
I’ve also been looking recently at reversals of director dealing activity by sector. To do this I look at the Directors net dealings over one year, and compare that data with the net activity over one month.
This throws up two sectors of interest, Travel, and Construction and Materials. In the Construction and Materials sector, stocks where we have seen significant director sales in the last twelve months more recently countered by buying activity over the last month, include Carillion (CLLN), Keller (KLR), and Rok (ROK).
In the Travel sector stocks that show a reversal from net selling to net buying are Clapham House, Partygaming, Restaurant Group and Prezzo.
Clearly both these sectors are highly exposed to Interest rates and Consumer sentiment. Opportunities present themselves in the stock market when investor sentiment is one sided. Any change in sentiment results in significant share price changes, as we are starting to see in the Real Estate Sector.
(Real estate sector stocks showing director buying activity over the last month are Sovereign SVN, Warner WNER, Rugby RES, Big Yellow BYG, Naya Bharat NBPC, DTZ DTZ, Hansteen HSTN, Quinlam QED, Real Estate Opportunities REO, Dolphin Capital DCI)
I was prompted to take a relook at Aegis (AGS, 115p) today after reading Questors thoughts. I had noticed in November unusual behaviour by three executive directors who were buying shares in their employer, in an industry I believe to be highly exposed to economic growth. I noticed then that this was a company well positioned to benefit from ‘digital media’.
Mainardo Nardis (CEO of Aegis Media division), Alicia Lesniak (CFO), and Robert Lerwill (CEO) all bought shares between 14th and 19th November, at prices between 116p and 118p, totalling £175k. This was a change in behaviour, as three other directors at Aegis (Chedore, Hicks and Verklin) had, over 12 months to May 2007, unloaded about 3.2m shares between them at prices between 126p and 145p.
It is rather brave don’t you think to buy shares and then, only one month later, issue a trading statement which results in a 6% upward move in the share price? Here is a brief extract: ‘Group organic revenue growth ….remained very strong, and significantly ahead of the market’.
I also agree with Questor ‘it looks like good value’.
Last Thursday, November 21st, the three amigos at Michael Page International (MPI), CEO Ingham, CFO Puckett and MD Dumon, stepped in to buy back shares they had sold only 7 1/2 months earlier at twice the price.
They each bought 170,000 shares at 280p. Puckett and Ingham sold on April 10th around 147,000 shares at 560p each. Dumon sold 428,000 shares on April 10th and May 4th at between 560p and 580p.
I suggested in my post on November 14th that, following the move by Nelson, CFO of SThree (STHR), who bought £100k worth of shares at 211p having sold in November 2006 at 372p, we were likely to see a positive share price move in the sector.
Look for more news from SThree next Thursday, when they give us a ‘pre close trading update’. This is likely to be positive for the Recruitment Sector overall.
What credibility do you give to this share purchase:
1. 40+ years exerience in the sector
2. Non exec Chairman
3. Sold around £750k of stock in May this year (great timing)
4. First purchase in 5 years (I don’t have the data before then)
5. Increased position in company by 300%
6. Bought £1.6m of stock at prices between 496p and 515p, having sold £744k’s worth in May this year at 708p.
Take a look at Richard Peskin of Great Portland Estates. He looks like a happy guy doesn’t he?
Gt Portland Estates Development Director Noel also put money to work, but only a measly £50k. This is the second purchase in the sector since Hammerson last week (Non exec Clare, who also bought back stock he had sold earlier in the year at prices 50% higher than today).
When we see the third director purchase in this sector then it is time for me to buy too.
Addendum: see FT Alphaville article on sector: http://ftalphaville.ft.com/blog/2007/11/19/8998/mid-season-stock-clearance-in-the-property-sector/
Addendum: 20 November- Peskin bought another 150,000 shares, taking his holding to 583,000, having spent £716,000.
followthedirectors... a study of directors share dealings 