You are currently browsing the category archive for the ‘WEAK signal’ category.
At 52p this time last year the Telegraph tipped Ennstone (ENN, 27.5p) as a possible bid candidate. It compared the valuation of Ennstone, the ‘last London listed aggregates company left in Britain’ with the then recent acquisition of Hanson at 12.5x ebitda (vs Ennstone at the time at 8.5x ebitda).
They went on to comment that ‘Altium, the house broker, estimates that the share price is only marginally above the company’s underlying asset value.’ (link to Telegraph article of 26/5/07)
For me Ennstone shares right now stand out by trading up on the day, while stocks in the same sector (building materials) plummet over belated concerns about UK housebuilding (capitulation stage?).
Now at 27.5p, Ennstone are trading at half the price of a year ago. Would you find that attractive?
It seems some of the directors at Ennstone do, in particular Eric Gadsden, a non executive deputy chairman. Gadsden since November has bought 2.75m shares between 40p in November and 27p on Monday, taking his holding to 3.8m shares.
I don’t think this is a ‘bid tomorrow’ situation, as there aren’t enough directors buying shares. But I do think it wise in the long term to follow Gadsdens lead.
Signal strength- WEAK (only one director buying)
I’m intrigued.
Galiform (GFRM, 71p) own Howdens Joinery, which supplies kitchens and joinery products to the building trade.
In a week of turmoil in the UK housebuilding industry prompted by Persimmon warning they would stop building new homes, I find that the CFO of Galiform, Mark Robson, makes his first purchase of shares since he joined the board in 2005.
Robson on April 15th bought 132,000 shares at 77 1/2 p, investing £102,000.
As a result Galiform goes on the watch list.
Addendum May 1st : I’m no longer intrigued. Stock is up 7% today on results better than the market anticipated. See reuters comment here.
Like any transaction with a bank, you need to read the fine print before deciding on the merits of the offer.
Now that HBOS have released details of their directors purchases (why didn’t they tell us on Thursday?), I have changed my opinion as to the significance of these directors dealings.
1. The Bank EXPECTS executive directors to [buy shares] have meaningful shareholdings. ‘Every year since 2002 all incentive outcomes earned by all Executive Directors have, at their choice, been taken as HBOS shares, rather than cash’. The shares bought last Thursday were paid for using the net bonus paid to directors.
2. The increase in share positions is small, averaging only 16% of their pre purchase position in HBOS, wioth the exception of Jo Dawson, who increased her position by 49%.
3. The investments just made can be increased by up to 200% by the bank, dependent on real eps performance over three years. So these guys could be buying shares at 150p if they perform!
‘Executive Directors may receive up to 200% enhancement (250% for the CEO) of such shareholding dependent on growth in eps over three years in excess or RPI. 0% pa eps growth over RPI = 0% additional shares. +3% = 100% additional. +6% = 200% additional.’
My conclusion and revised opinion:
If the executive directors hadn’t bought shares in HBOS then that would have been something of concern. The fact that they did is in my view, and the view of the Bank, normal and expected behaviour. So the purchase on Thursday is in the normal course of business, and should not be taken as a positive message by investors.
For further details on remuneration policy see pp126-128 in the hbos plc 2007 Annual report and Accounts: http://www.hbosplc.com/investors/results/ARA_2007/downloads/HBOS_ARAreduce.pdf
Isn’t two months a long time in these markets!!
I was trying to find this post about the Easyjet (EZJ, 359p) Chairman Colin Chandlers track record in buying shares, and thought I’d written it only last month.
Now we see Andrew Harrison, the CEO, last week buying 72,000 shares at 345p, putting £250k to work. He has increased his position by more than 1/3rd so far this year, having put in another £250k in January at 424p per share.
The stock fell ( collapsed?) last week after easyjet disclosed that it would suffer from jet fuel price rises. No kidding !! What do you pay these equity analysts to do? Any conversation with the company would have revealed how far forward they were hedged, and jet fuel prices are quoted daily.
I stick to my view in January that these guys are worth following.
followthedirectors... a study of directors share dealings 