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There’s a plethora of information about directors share dealings in Cairn Energy ( CNE, 2915p) last week.
If you filter out the sales by executive directors of shares released under the Long Term Incentive Plan, and eliminate shareholdings sold and bought back before CGT changes, you are left with four notable changes in holdings:
1. CEO Sir Bill Gammall has sold 50,000 shares taking his holding to 377,000 shares.
2. Exploration Director Dr Mike Watts sold 40,000 shares taking his holding to 160,000 shares.
In my mind both of the above sales are interesting but not hugely significant.
Of greater interest are the sales by Non Executive Directors as follows:
3. Non executive Chairman Norman Murray halves his holding by selling 40,000 shares at £28.61, releasing £1.1m, and
4. Non executive Director Todd Hart reduces his holding by more than a third, selling 10,000 shares to leave him with 18,000.
I believe these sales to be significant, both in value terms, and as a proportion of the directors’ position (holding) in Cairn prior to the sales.
Source: http://www.Digitallook.com
The Restaurant Group (RTN, 135p) keeps hitting the radar screen. This is the owner of Garfunkels, Frankie and Bennys, Chiquito, as well as many other brands and concessions, owning over 300 restaurants in the UK.
It hits the screen on director purchases, but also because these purchases are in a sector highly vulnerable to a fall in consumer confidence. And lastly, it scores highly due to the unusually high number of directors buying shares.
Five executive directors, the Non Exec Chairman, and the Company Secretary have over the last month put £400k to work in Restaurant Group shares.
Andrew Page, who was wise (not lucky, surely) enough to execrise an option and sell 650,000 shares at 351p in March last year, is now starting to buy back at less than half the price. Page has increased his position in Restaurant by about 60% over the last two weeks, buying 147,000 shares at between 140p and 147p.
Other directors who have participated in purchases are Bacon, Corzine, Morgan, Critoph, and Richardson, increasing their positions by between 15 and 50%.
Mike Butterworth, CFO, and Nick Salmon, CEO, of Cookson Group PLC (CKSN, 614p) yet again put their money where their mouth is.
Cookson on Tuesday declared in line results for 2007, with a confident outlook for 2008.
Butterworth and Salmon have been consistent buyers of the stock over the last three years. They last bought in March 2007, which prompted me to pick up some stock too. From March to October Cookson outperformed the FTSE250 by 40%. Since June 2005 Cookson were up 130% vs the FTSE250 up 60%, until October 2007. They’ve given up all this outperformance over the three months to January 2008.
The fact that Butterworth and Salmon have increased their holdings in Cookson by 90% and 45% respectively, gives me the confidence to buy some more for myself.
This is not a short term trade, ahead of news, but a longer term ‘invest alongside the management’ which has worked for me before.
Caveat: I’ve just read the statement from the company, not disclosed in the stock exchange statement, which shows this purchase to be part of the long term incentive plan. Under this plan, Butterworth and Salmon get ‘matching shares’ which means that essentially they’ve bought this stock at under 300p. So substantially lower risk to them than buying them at 590p (like you or I would have to).
I was just looking at the forthcoming news, and see that Savills (SVS, 344p ) have their results this week (Wednesday March 12th).
A pretty non committal trading statement in January, and decent performance by the Real Estate sector (Savills classified by FTA as Real Estate) mean that this stock has been a great performer. Savills are up around 50% from their January lows, and have also outperformed Taylor Wimpey by 50% since the turn of the year.
I warned that it was too early to buy the housebuilders when I saw a director at Savills selling down his position in November at 353p. But I really now believe that any news this week from Savills is likely to be negative for the share price.
No matter what they say about global reach, 80% of operating profits come from the UK. And did you know that they have more than 17,000 employees ? Yes, a large chunk of costs will be commission (1/3rd of total staff costs), but 17,000 people is a heavy cost base to manage when things are turning down.
Another thing. Savills financial results didn’t seem to have any gearing to the upside when revenues were rising (revenues up 34%, operating profits only up 10% at June 2007 interim results) which means costs (staff costs up 35%) have been rising as fast as revenues. So watch what happens when revenues start falling.
Sources:
Savills H1 results presentation: http://ir.savills.com/savills/finnews/reports/interim07pres/interim07pres.pdf
Google Finance: http://finance.google.com/finance
Digitallook.com: http://www.digitallook.com/
For all articles on Savills published on followthedirectors click here.
Severfield-Rowen, or SFR plc (SFR, 257p), a supplier of structural steel to large infrastructure projects in the UK, recently warned of softening demand going into 2008, which resulted in a 40% drop in share price. This could have been because investors were shocked to hear negative news on January 24th, having only as recently as December 10th had an upbeat pre close trading statement. Maybe in retail you might see such a quick shift in the trading environment, but not in a business such as structural steel, with long lead times.
So do SFR know what is going on with their customers, or was this just a screw up by SFR management, their brokers, and PR advisors?
I’ll let you decide on this evidence:
Five directors of SFR (11 exec and non exec directors) sold shares between 498p and 565p (adjusted for split) in April and May 2007.
After the share price collapsed last week (January 24th from 390p to a low of 222p the same day), five directors bought shares at between 256p and 258p, investing between £20k and £99k. They increased their holdings by between 50% and 200%.
The icing on the cake came this week, when non exec Chairman Peter Levine invested £992k in 400k shares at 248p. Levine has been Chairman of SFR since 1998. He has been selling SFR shares since April 2006, selling a total of 265k shares (equivalent in new post split form). This is the first time I’ve seen him buying (as far as I can find in the data), and he has increased his position by a multiple of four.
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)
Fabiola Arredondo clearly believes in this story. Enough to commit to Experian (EXPN, 414p) a further £232k last Friday at 416p, on top of £176k invested at similar levels back on the 16th and 20th of November.
I said in my post on Experian of 29/11 that I would like to see Fitzpatrick, another non exec, committing more capital. Maybe last Wednesdays investment of £86k by non exec Alan Jebson makes up for that.
To summarise then, we’ve seen four non execs commit a total of just shy of £1.1m to Experian shares in the last three weeks, at between 410p and 431p.
My sunburnt nose tells me there’s a very nice story developing here, and I’m off to buy some EXPN for myself.
followthedirectors... a study of directors share dealings 