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In a year of turmoil for ITV (ITV, 43.5p) due to advertising slowdown, a switch away from viewing TV to computers and many other ongoing dramas, the ITV share price has fallen from 121p high in May last year, to a low of 38p in July this year.
If you look at the recent press comment, there is an ongoing discussion with Ofcom over how much ITV can cut back to reduce its costs.
In this time of turmoil it is therefore intriguing to see directors starting to buy.
Ian Griffiths, CFO, on September 10th bought 100,000 shares at 47.2p, initiating his holding, only a day after he was appointed (did he feel duty bound to buy shares to shares?).
Peter Fincham, Director of Television, on September 24th bought 350,000 shares at 42.75p, also initiating a position.
And Sir George Russell, the Deputy Chairman, via Lady Russell, bought 57,000 shares at 43p on September 24th, taking their holding to 62,000 shares.
I’d like to see a few other directors buy shares at these levels, especially when they’ve paid prices 50-150% higher in the past. In particular Cresswell, Ormerod and Crosby.
In the meantime these transactions merit a ‘WEAK signal’, with the potential to be upgraded pending further director purchases.
Over the last couple of weeks w’ve seen two directors selling shares in RBS (RBS, 214p):
Non exec Lawrence Fish sold 140,000 shares at 223.36p on September 22nd. This takes him to 182,309 shares. He had bought 119,000 shares in the June capital raising at 200p per share.
General Counsel and Group Secretary Miller McLean sold 60,000 shares at 248p on September 10th. He bought 526,000 shares in the June offer.
McLean owns over 1.3m shares in RBS, and Fish was recently apponted a non exec in May this year, having previously held an Executive position.
Are these share sales significant? Not yet.
Find other posts on RBS here.
Lord Cairns and Guy Wilson, both recently appointed non execs at Fresnillo (FRES, 405p) have both invested £57,000 each, to initiate a position in the worlds largest silver mine.
I take these purchases with a pinch of salt, as
1. Cairns and Wilson have only recently taken up their positions as non execs (April and July this year respectively).
2. Judging by their age and extensive management history, I suspect £58k is a minimal investment compared to their net worth (see Fresnillo plc website for short bio’s)
I therefore rank these maiden purchases as giving me a WEAK SIGNAL, pending further financial commitment by these two non execs.
In times of uncertainty as to the direction of the oil price, it is with heightened awareness that I look at directors dealings in the oil sector.
But Lord Kerrs purchase of 2500 shares in Royal Dutch (RDSB, 1892p) at £18.72p doesn’t give me any direction.
He has been a consistent buyer over the last few years, but his purchases always seem to be in the upper half of the trading range for Royal Dutch’s shares.
In each of the last three purchases, he could have bought 5-10% cheaper within the next 1-3 months.
I know regulations only allow a narrow window for directors to deal in shares of their own company, but that is no excuse for paying too much.
There’s been a lot of hype surrounding Liberty International (LII, 984p) recently, with two ‘stakebuilders’ active (see Times comment below)
So it is interesting to see an announcement on Friday about a PDMR (senior management) individual exercising options and selling all the shares. ‘Normal’ behaviour across most situations where options are exercised, is to sell sufficient to pay all associated taxes (so around 40% of the exercised shares).
Liberty announced that (PDMR) Harold Newton had exercised 22638 shares, and sold the same number, leaving his holding unchanged at 93010 shares. One implication of this might be that Newton didn’t think it imperative to hold on to the 13,000 shares he didn’t need to sell for tax reasons.
From
August 23, 2008
‘Bid prospect puts new life into Liberty International
Market report
Bid speculation became the dominant theme in a rising market yesterday with much attention centred on Liberty International, the group behind shopping centres including Lakeside and Covent Garden.
Liberty rose 70p to 945p after news that Simon Property Group, one of the largest public real estate operators in America, had raised its stake in the company to 3.45 per cent.
Simon has been gradually and quietly building its stake in the British retail-focused real estate investment trust (Reit) for the past few months, taking advantage of its weak share price, dragged down by plummeting property valuations. This month Liberty reported a 7.4 per cent fall in the value of its portfolio and gave warning that the property market was unlikely to pick up in the near future.
It is understood that the two groups have a close relationship, but it is thought unlikely that Simon’s stake-building will lead to a bid. The 8 per cent rise in Liberty’s share price also reflected a degree of short squeezing as those who had been bearish on the company covered their positions.’
M&S (MKS, 276p)
Deputy Chairman Sir David Michels on August 14th bought 37,734 shares at 265p, taking his holding to 113,984 shares. This is in addition to his recent purchase of 47,500 shares on July 29th.
The retail sector has been firm recently on the back of weaker oil prices, maybe anticipating that inflation in the UK will fall away in the coming months.
I mentioned in my last post of July 30th that I needed to see more commitment from other directors before buying shares myself. Thursdays purchase by Michels hasn’t changed this.
Signal strength for M&S remains WEAK
DSG International (DSGI, 55p), Dixons to you and me, hits the radar as a possible recovery stock.
On July 7th the ‘new’ CEO John Browett bought 125,000 shares at 38p, investing £47k.
Last Friday non exec Andrew Lynch bought 20,000 shares at 50p, investing just £10k.
These are the first decent purchases by directors of DSG in almost FIVE years, with the exception of non exec John Whybrows solo purchase on 21st June 2007 of 95,000 at 163p.
At the moment DSG will go on the ‘WEAK signal‘ list, pending further purchases by the same or other directors.
For a recent article on DSGs ‘past mistakes’ see The Times here.
Sir John Banham, Chairman of Johnson Matthey (JMAT, 1600p), yesterday bought 7400 shares at 1604p, investing £119,000 and taking his holding to 15400 shares.
Is this significant as a signal for investors?
Yes:
First purchase that I can find for any director looking back to 2004.
First purchase by Banham since he was made Chairman in April 2006.
Decent size in £.
Doubles size of holding for Banham.
No:
Sole buyer. Need to see other directors following Banhams lead by investing their own hard earned $$ before I invest in JMAT.
All the previous ‘acquisitions’ by directors have been through ‘Long Term Investment Plan’ options, whereby directors exercise the options and sell off around 40% to satisfy their tax liability.
So the jury remains out, but could change if/when we see other directors buying. As it stands, this is a WEAK SIGNAL.
It was reported to the London Stock Exchange that the Finance Director of BT Group (BT.A, 171.3p) Hanif Lalani, had bought 58,515 shares in BT at 170.90p, investing £100,000.
Although this increases Lalanis position in BT by more than 50% (to 169,812 shares) I view this move as being of little use as a signal to investors.
1. Lalani is acting alone amongst the board members in buying BT shares. A stronger signal would be generated by other board members buying.
2. £100k is not significant in the context of Lalanis income, and probably not in terms of his net wealth either. Hanif Lalanis income including benefits but excluding any ratchet on his deferred bonus plan amounted to £1,076,000 last year (source: BT 2008 annual report).
Following first half results which were better than expected ( see Questor article of 31/7 here), Rexam (REX 376p) directors have started to buy again.
Chairman Peter Ellwood has doubled his position to 20,000 shares, investing £38k at 380p. His colleague Bill Baker, and Executive Director of Rexam, has increased his holding by 20,000 shares to 194,000 shares, by investing £76k.
In mid December 2007 Rexam issued a profit warning which sent the shares down by 20%.
Eight directors of Rexam subsequently bought shares at between 410p and 435p, increasing their holdings by an average of 70% each. The shares rallied to 480p over the next five months, outperforming the FTSE by 20%.
For me to be convinced, I need to see the board of Rexam as committed now as they were back in December. These small purchases by Ellwood and Baker do not make the grade.
followthedirectors... a study of directors share dealings 