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At 52p this time last year the Telegraph tipped Ennstone (ENN, 27.5p) as a possible bid candidate. It compared the valuation of Ennstone, the ‘last London listed aggregates company left in Britain’ with the then recent acquisition of Hanson at 12.5x ebitda (vs Ennstone at the time at 8.5x ebitda).

They went on to comment that ‘Altium, the house broker, estimates that the share price is only marginally above the company’s underlying asset value.’ (link to Telegraph article of 26/5/07)

For me Ennstone shares right now stand out by trading up on the day, while stocks in the same sector (building materials) plummet over belated concerns about UK housebuilding (capitulation stage?).

Now at 27.5p, Ennstone are trading at half the price of a year ago. Would you find that attractive?

It seems some of the directors at Ennstone do, in particular Eric Gadsden, a non executive deputy chairman. Gadsden since November has bought 2.75m shares between 40p in November and 27p on Monday, taking his holding to 3.8m shares.

I don’t think this is a ‘bid tomorrow’ situation, as there aren’t enough directors buying shares. But I do think it wise in the long term to follow Gadsdens lead.

Signal strength- WEAK (only one director buying)

This reminds me a little of EMI and Enodis, where takeover talks failed, directors piled in, then the takeover talks were resumed, this time successfully.

Fiberweb (FWEB, 51p) however is tiny, with just a £60m market cap.

Takeover talks collapsed on April 23rd (see Independent comment here).

Between the 8th and the 15th of May, the CFO Abrams, CEO Dayan, and Non exec Stillwell all increased their positions substantially:

Abrams (CFO) bought 108,000 shares at 45.6p, investing £50k. He now owns 108,000 shares.

Dyan (CEO) bought 760,000 shares at 45.6p, investing £347k. He now owns 960,000 shares.

and Stillwell, a non exec director of Fiberweb, bought 60,000 shares at 40.5p, investing £24k. he now owns 87,000 shares.

So £370k invested between them, increasing existing positions substantially, with the potential now that capital markets are recovering for the bidder to come back again.

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June 2022