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Senior plc’s (SNR, 50p) trading statement gets a positive reception from the press, who point to both the low valuation but also the risk to orders from the ongoing Boeing strike:
Telegraph article: ‘Questor says Buy’. Times article :‘those with mettle should buy’.
The Directors of Senior however have been busy buying shares in the market.
- September 18th: CFO Simon Nicholls bought 5000 at 85p initiating a position.
- October 9th: Non exec Martin Clark (for Mrs Clark) bought 30,000 shares at 72.5p, taking their holding to 90,000 shares.
- 20th October: Non exec Michael Steel bought 20,000 at 40p initiating a position.
- 21st October: Non exec David Best bought 20,195 at 49.15p taking his holding to just over 40k.
- 21st October: David Ryan, a PDMR, bought 10,000 shares at 42.5p, initiating a position.
- 21st October: Simon Nicholls, CFO, averaged down by buying 15,000 shares at 46p taking his position to 20,000 shares.
So you can see what the directors of Senior think about their share price!!
Unfortunately these purchases don’t score as high as they might, despite having five directors /PDMRs buying shares and all initiating a position or increasing holdings by at least 50%.
I’d love to see more $$ committed to move this to a STRONG signal. The average purchase is less than GBP 10k.
View on Senior plc: Positive
Signal strength: MEDIUM (need to see greater cash commitment for this to be a Strong signal).
Premier Foods (PFD, 32.25p) share price has been in turmoil recently, over concerns that the group ‘faces challenges over reducing its £1.8 billion of debt’ (Telegraph article October 18th).
The group on Friday October 17th issued a statement aimed to calm concerns over the balance sheet:
‘Premier anticipates meeting its financial covenants at 31 December 2008. In current market conditions the Board is not pursuing any current plans to issue equity or equity linked products.’
Directors across the board followed up on the statement with share purchases (see regulatory announcement here) thereby sending a signal to the market that they meant what they said, and were prepared to commit their own funds to buy shares.
Directors and non execs bought 862,000 shares at around 32p, committing GBP 275k.
Are these purchases of value in stock selection?
Yes:
- 7 directors and 4 PDMRs have bought shares,
- Management have committed GBP 275k of their own cash
- Management have increased shareholdings by between 12% and 600%
No:
- The directors have a poor track record. They have been buying shares all the way down from 247p in September 2007.
I’m afraid the poor track record means that the share purchases do not warrant a ‘STRONG signal’ on the followthedirectors ‘significance of directors dealing’ scale.
View on Premier Foods: Positive- Directors buying
Significance of signal: MEDIUM strength.
Thomas Cross (CFO) and David McFarlane (CFO) pretty much called the top on Dana in June this year when they exercised options to buy shares at 236p and 414p respectively, and then sold them at 1886p and 1881p respectively.
They took GBP 4 million and GBP 1.76m respectively out of Dana Petroleum (DNX, 1037p) within 5% of the high (1972p in May).
So it is interesting to see a whisper of positive news just this last week as two directors buy shares.
Brian Johnston, a non exec, on October 8th bought 6000 shares at 908p, inititaing a position in the company.
Two days later, on October 10th, Stuart Paton, the Technical and Commercial Director, bought 9179 shares at 894p, taking his position to 32,529 shares.
Between them they have committed GBP 137k to the company, which is minimal when compared with the money taken out by the CFO and CEO in June.
It is however an important signal to investors, which may establish a level of support for the shares.
Please also note that we have recently seen hesitant director purchases in other natural resources stocks including Xstrata, Cairn Energy, and Premier Oil.
View on Dana: Positive, Directors are buying shares
Strength of Signal: Medium
See comment of October 19th: Dana Petroleum – CEO invests at 853p having sold at 1886p in June.
In HSBC (HSBA, 790p) I see a strong, well managed, diversified global bank, with a higher exposure to the growth markets of Asia than its (now nationalised) compatriots on the London Stock Exchange.
I notice though the first significant signs of Chinese slowdown in the announcement on Thursday by Australia Iron Ore producer Mt Gibson (MGX, 71c) that their Chinese customers want to delay shipments.
In their statement (link to co website) Mt Gibson say ‘ Customer and iron ore sector analysis indicates a slow down in demand for iron ore in China due to current economic uncertainty and the tightening of credit facilities’.
Whose ‘credit facilities’ I wonder, the Chinese or their Western customers?
I also notice directors share sales at HSBC, wth a DD John, a ‘PDMR’ (senior manager but not group board member) selling 61434 shares at 907p on October 1st.
Reviewing other directors sales over the past twelve months I find sales taking place at between 766p and 884p between October 2007 and June 2008 totalling around 400,000 shares or GBP 4m. Directors who have sold include Hughes Hallett (non exec), Almeida (non exec), Green (Chairman), Flint (CFO), and Geoghahan (CEO). For full details go to www.digitallook.com or to the HSBC company website.
I wonder how long HSBC can weather the storm that banks in the rest of the world are currently embroiled in. I think the price levels at which share sales by six directors took place are a good indicator of a medium term peak level for HSBC shares.
Signal: Negative- Directors selling
Signal Strength: MEDIUM
October 17: Anecdotal information on the Chinese economy from a contact in Hong Kong:
Second largest Chinese port shows exports down 14% since July.
40% of the Chinese toy companies are now insolvent.
Also see: ‘Credit crisis casts gloom over China’s exporters’ (October 14th, Associated Press)
For subsequent comments on HSBC (November 10th and November 14th) see here.
Up almost 50% from Julys low (730p), Rathbone (RAT, 1060p) (chart) are seeing a couple of their Executive Directors take advantage of a strong share price to reduce their exposure.
Richard Smeeton has sold (on 19/9/08) 12,000 shares at 1035p taking his holding to 115,673 shares, and Andrew Morris has sold (23/9/08) 11,791 shares at 1063p, taking his holding down to 41,268 shares.
Another two directors (Ian Buckley and Richard Loader) have also sold, but in much smaller size.
These trades echo selling at Hargreaves Lansdowne (see my posts here), also up 50% from the lows, where three directors continue to sell.
Four directors selling, but not a significant portion of their holding, warrants a MEDIUM strength signal. The risks lie on the downside.
Addendum October 14th:
Further sales have been reported as follows:
Clive Hexton, on the board of Rathbone Investment Management, has sold 5200 shares at 983p taking his holding to 8700 shares (October 6th), and
Hugh Adlington, at Rathbones Investment Management London, has sold 10,000 shares at 987p, taking his holding to 44,000 shares (October 3rd).
Axis Shield (ASD, 307p) (website) is an old favourite of mine. I met the company, and at the same time noticed directors buying in Spring 2005 at prices almost double where they were a year earlier. The stock then continued to perform, moving up 50% within months.
Now I see that Erik Hornnaess, a non exec director but previously Chairman of Axis before their merger in 1999, has been buying shares which have outperformed the market by 40% so far this year.
Between September 3rd and 15th, Hornnaess has bought 20,000 shares at 320p, taking his holding to 125,961 shares. Four of his colleagues had earlier this year (January to April) also bought shares, all around the 270p level. They are Keen (non exec Chairman), McAndrew (previously non exec Chairman), Hermansen (CFO) and Gilham (CEO).
Signal strength: MEDIUM
This is a small cap company with a market cap of only GBP 150m. Be patient and you will be rewarded.
followthedirectors... a study of directors share dealings 