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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
Mixed messages me thinks on IG Group (IGG, 183p)
January 20th 2009 saw a presentation and announcement by IG Group for the six month period to end November 2008 (can be found on company website), from which I have copied the following phrase:
‘trading since the period end has continued to be strong’
This was supported by presentations and discussions with investors and brokers, in the vein that activity continued to be strong due to the high level of volatility in the market.
March 10th 2009, in an ‘Interim management statement’ , IG Group said that
‘growth against very strong comparatives, is challenging (in UK and Australia)’
‘overall growth of the Group is impacted by a very strong comparative period’
‘UK has been affected by the implementation of more stringent risk controls in October’
‘The uplift of revenue that the group typically experiences on a higher volatility day is becoming progressively less marked’
The FT commented : ‘IG yesterday said revenue in both the UK and Australia – its two biggest markets – had fallen by 7 per cent to £31.5m and £6.4m respectively during its third financial quarter’.
And not surpisingly, the share price falls by more than a third, from 260p to 180p.
So what happened? January 20th was already 51 days into the quarter.
Either trading collapsed since January 20th, or the company hadn’t detected a deterioration in trading when they announced Interim results on January 20th.
But wait! Somebody must have had an inkling of the risks inherent in the shares. Maybe the COO, Peter Hetherington believed the shares to fully reflect the positive news, with risk on the downside. He sold on January 28th and 29th 700,000 shares, reducing his position in the group by almost 40%.
We commented on Hetheringtons sale on February 2nd, when the share price was 280p.
View on IG Group – close negative view with 34% absolute and 32% relative (to FTSE 250) return.