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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.
It is often observed that directors dealings are made against the trend of the market. This is probably due to the longer term nature of directors as investors in their own company, but also due to the narrow window (before period end and after declaration of results) when directors can legally transact.
Johnson Matthey (JMAT, 1412p) are seen as vulnerable to a slowing economy in at least two ways, namely falling demand for auto catalysts, and falling precious metal prices. So the recent share purchase transactions by two non execs are worth noting.
On August 7th Chairman John Banham bought 7400 shares at 1604p, investing GBP 118k, and almost doubling his holding to 15,400 shares.
A month laster he is joined by Non exec Michael Roney, who trebles his holding in Johnson Matthey by buying 2,000 shares at 1447p by investing GBP 29,000.
On August 8th I commented on Banhams purchase, saying that I needed further directors purchases for an upgrade from ‘WEAK signal’
These are the first purchases by directors in over five years (excepting options exercise) according to the data available on Digitallook (www.digitallook.com). They follow a number of directors selling shares to pay taxes (after release of shares from the Long Term Incentive Plan) only weeks earlier.
My conclusion on this information of directors share purchases is that it is worth noting due to the size of increase in holding, as well as the $$ value. I’d like to see further purchases from other directors before turning positive (or STRONG signal) on Johnson Matthey.
Signal Strength: MEDIUM (Upgraded from WEAK signal in my comment of August 8th)
Link to July 25th Questor article ‘Platinum turns Johnson Matthey into gold’.
In late October last year Bioquell (BQE, 177.5p) shares jumped by 25% to a high of 252p on news that the UKs department of Health Rapid Review Panel had classified Bioquells superbug eradication technology as Category 1 [whatever that means].
Eight months later, at below 150p, directors started buying:
30th June 2008, the last day of the financial half year- CEO Nick Adams buys 20,000 shares at 149p, taking his holding to 720,000 shares. On the same day Non exec Simon Constantine buys 26,000 shares at 150p, taking his holding to 456,000 shares.
5th September, after some decent results were announced on 27th August, the COO Mark Bodeker buys 20,000 shares at 175p, taking his holding to 34,000 shares. He is accompanied by Non exec Nigel Keen, who buys 20,000 shares at 180p, taking his holding to 35,000 shares.
Both Bodeker and Adams have substantial share options, totalling 706,000 and 673,000 shares repectively, exercisable in various tranches between now and 2011. They were also paid in cash around GBP 200k each last year.
So in view of this a GBP 30-40k is not a significant investment.
However Bodeker and Keen have increased their shareholdings by more than 100%, and four directors have bought shares over the last two months, which is unusual if you compare this with the limited activity by directors over the last two years.
I would classify this recent director activity as having a ‘MEDIUM strength’ signal for investors. Having said this I would not be surprised to see future positive news of more hospital rollouts for this successful technology in the area of cleansing wards of C-difficile.
The former Scottish Media Group, now SMG (SMG, 11.75p), have seen three directors buying shares over the last week, at around 1/10th of the price of SMG just over two years ago.
In my mind these purchases are relatively small, with each director committing between GBP 10k to GBP 18k, but the increase in holding and the ‘grouping’ of three directors buying within days of each other drew my attention to this company.
Jamie Matheson, Non Exec director, on September 1st bought 250,000 shares at 9.25p, taking his holding to 250,000 shares,
Rob Woodward, CEO, on September 5th bought 175,000 shares at 10.5p, taking his holding to 400,000 shares, and
George Watt, CFO, on September 5th bought 100,000 shares at 10.5p, taking his holding to 372,000 shares.
Due to the low $$ value committed, but a significant increase in holdings and the number of directors buying, SMG ranks a ‘MEDIUM strength’ in terms of the value of the directors dealings as a signal to investors.
Capital and Regional (CAL, 199p) get a great rap for their news of an ‘overhaul of its banking covenants and significantly reduced overall debt levels’ , see Telegraph article here.
It should come as no surprise then to find management confident and buying shares, having been extensive sellers in 2006 and 2007.
From October 2006 to May 2008, Kenneth Ford, Head of the shopping centre portfolio, sold 210,000 shares, realising about £1.2 million. That’s an average price of around £6 per share. He actually sold as high as £15.30p in April last year, not far off the stocks high of £16.95p in February 2007.
This week Ford bought 50,000 shares at 184.9p, taking his position to 606,000 shares.
Tom Chandos, Non exec Chairman bought 40,000 at the same price, doubling his holding to 80,000 shares, and Hugh Scott-Barratt, the CEO, bought 50,000 shares at 183.5p, a 1/3rd increase in his position to 200,000 shares.
So decent size purchases in £ terms, an average increase in holdings of more than 40%, and three directors buying. Yes I agree that Ford especially has a lot of earlier sales proceeds to commit, but I think these purchases herald the beginning of the end of the ‘fear’ period for Capital and Regional.
Signal strength: MEDIUM, with potential to upgrade pending further ££ purchases by directors.
How else can you describe a share price that is up 25% since the last profit warning.
And now Bernard Burns, CEO, has increased his holding in William Sinclair (SNCL, 74.5p) by almost 40%, buying 65,000 shares at 74p yesterday.
An intriguing move considering the group issued two profit warnings (June 24th ‘weather and easter timing’ and July 28th ‘cost rises and rain’) and the 15 months financial period closes on September 30th.
I’d bet there’s something else blooming at William Sinclair that we don’t know about yet, but somebody else does. It’s a pity this is a real tiddler (£12m mkt cap) with no liquidity.
Directors of Roc Oil (ROC, 58.5p) were consistently selling shares in late 2007 at prices between 128p and 150p (Clement, Dobinson, Jolliffe, Jansma all sold between October and December 2007 at between 128p and 150p).
I noticed a change of behaviour last week, as two executive directors bought shares.
Dennis Paterson, President of Roc Oil China, bought 87,000 shares at 43p on August 26th, taking his holding to 87,000 shares plus options on a further 470,000.
Bruce Clement, Acting CEO, bought 40,000 shares at 113 Aussie cents to 114 Aussie cents on August 25th and 29th. This purchase took his position to 120,000 shares and options on a further 680,000.
In $ terms these purchases are not significant, but in terms of the % increase in holding, and the behavioral change from selling to buying, I believe they are significant.
The value of this directors share purchase as a signal for investors will be graded MEDIUM, subject to an upgrade if we see further purchases.
Roc Oil is listed on AIM in London, and on the ASX in Sydney.
Directors dealing news this week has been like the number 19 bus. None all week, and then they all come at once, on Friday. Let’s start with Diageo:
Paul Walsh, CEO of Diageo (DGE, 1017p) has sold again, this time selling 39148 shares at 1001p, taking his holding to 644,000 shares.
I have earlier commented (see here) on Walsh’s fortuitous timing in selling down his position, and will now put some numbers to show his success:
Date/Sale price/3 month performance relative to FTSE 100/Note
30/10/07 1100p. +2% Sale post options exercise
15/2/08 1081p -12% Outright sale
18/2/08 1068p -13% Outright sale
1/4/08 1050p -8% Sale post options exercise
9/5/08 1040p +8% Sale post options exercise
29/8/08 1001p ?? Outright sale
I think you can see where I’m coming from here.
Walsh’s timing has proven to be pretty good historically. I wouldn’t be buying DGE here.
Signal Strength remains MEDIUM
Raymarine (RAY, 129p) is ‘the world’s leading designer and manufacturer of integrated marine electronic navigation systems for recreational boats’.
So you can imagine what’s happened/happening to their order book as leisure boat sales take a tumble. See this Times article today for a [negative] view on yesterdays results.
So why then are directors buying? Between June 25th and yesterday, five out of the six directors have bought stock:
Peter Ward, Chairman, bought 32,000 shares at between 126p and 132p, taking his holding to 83,000 shares,
James Webster, Non exec, bought 10,000 at 126p, now holding 20,000 shares,
Stephen Day, also non exec, bought 10,000 at 128p, now holding 10,000 shares,
Malcolm Miller, CEO, bought 100,000 shares at 147p, now holding 567,000 shares, and
Tony Osbaldiston, CFO, bought 31,000 shares at 135p, now holding 240,000 shares.
In total 184,000 shares bought at an average just shy of 140p.
I’m torn between viewing these purchases as a STRONG or a MEDIUM signal. I’d like to see a greater commitment in terms of % of existing shareholding by the execs (roughly 14-21% increase in holdings), as well as a greater ££ spend.
I’d disagree with the Times recommendation of a Sell on Raymarine, as I think having 5 of the 6 directors buying is a positive signal.
Signal strength: MEDIUM
followthedirectors... a study of directors share dealings 