Savills shares down 10% ‘to miss earnings estimates’ – no kidding – director sold five weeks ago

October 17, 2008 in Directors selling, FTSE 250 company, STRONG signal | Tags: , | Leave a comment

September 12th: Simon Hope, Savills (SVS, 205p) Executive Director with responsibility for Capital Markets, sells 62283 Savills shares at 295p, taking his holding to 87,547 shares and raising GBP 183,797.

 

 

September 16th: followthedirectors comments: ‘Savills – further to fall – Directors sell’

October 17th : ‘Savills Says Earnings Will Miss Analysts’ Estimates’ (Bloomberg article) : ‘this year’s pretax profit will miss analysts’ estimates because of the slump in transactions caused by the credit-market turmoil.’

I know that in these markets five weeks is a lifetime, but do you not think the board of Savills have had regular discussions about the risk to their profits and earnings in their weekly board meetings?

If you had followed Savills directors dealings and the followthedirectors commentary, then this news would be no surprise to you.

Find below the performance you might have achieved if you had followed our commentary (I list here the dates of my comments, and the share price performance between them): 

November 8th (followthedirectors say ‘don’t buy’). Performance to March 10th SVS down 5%

March 10th (‘results wednesday, watch out’) Performance to August 4th, SVS down 35% absolute, or down 13% relative to the FTSE 250.

August 4th (‘time to buy?‘) to September 12th, SVS up 33% absolute, or 32% relative, but Hope didn’t announce his sale until yesterday, so use August 4th to September 15th, SVS up 23% absolute, or up 25% relative.

September 16th (‘further to fall’) to today October 17th, SVS down 23%, but up 5% relative to the FTSE 250.

I would suggest that the risk in Savills remains distinctly on the downside.

For all comments on Savills click here or type Savills into the search box on the left.

Genus breeding positive directors (five out of six buying shares)

October 16, 2008 in Directors buying, FTSE 250 company, STRONG signal | Tags: , | 1 comment

Genus plc (GNS, 680p) ‘creates advances to animal breeding through biotechnology and sells added value products for livestock farming and food producers. Its non-genetically modified organism technology is applicable across all livestock species but is only commercialised by Genus in the bovine and porcine farming sectors’.

Genus has been the subject of ‘bid talk’ with rumours of a bid as high as 1300p per share (Scotsman article).

So what do the directors of Genus think? The answer is that five out of the six directors have bought shares since February, at prices in a surprisingly narrow range of between 680p and 720p:

CEO Wood has bought 20,000 shares at 700p taking his holding to 20,200 shares (and 342,000 shares of conditional share awards as part of the Company Performance Share Plan).

Chairman Hawkins has bought 4100 shares at 716p initiating a position.

Non exec Worby bought 10,000 shares at 720p initiating a position.

Non exec Turner has bought 15,000 shares at 716p initiating a position, and lastly

Non exec Professor Furr bought 3000 shares yesterday at 680p initiating a position.

These transactions qualify for a STRONG signal:

  1. Five out of six directors buying shares
  2. Average investment above GBP 70k
  3. Significant increase in holding (four out of the five purchases are to initiate holdings)
  4. The words ‘bid rumour’ have arisen in the last six months.

The words smoke and fire come to mind.

View on Genus plc: Positive- directors buying

Signal Strength: STRONG

Hargreaves Lansdown- update- selling only warrants a ‘WEAK’ signal

October 15, 2008 in Directors selling, FTSE 250 company, WEAK signal | Tags: | Leave a comment

When I wrote my post of September 15th  ‘Hargreaves Lansdown- more selling, signal strength now STRONG’, I was unaware of the reason for so many share sales.

The reason directors of Hargreaves Lansdown (HL. 182p)  have been selling is that this is the anniversary of their listing (see Citywire article here), and the lock up for part of their shares falls away.

This in my mind justifies the share sales as the directors are probably diversifying their financial assets. Although you might question whether they would all rush for the exit if there was good news ahead!

As a result of this I believe these sales have a lower value to investors, and I am moving the Signal strength indicator from STRONG signal to WEAK signal.

For all comments on Hargreaves Lansdown click here.

Technical director thinks DANA Petroleum undervalued

October 15, 2008 in Directors buying, FTSE 250 company, MEDIUM signal | Tags: , , | 2 comments

Thomas Cross (CFO) and David McFarlane (CFO) pretty much called the top on Dana in June this year when they exercised options to buy shares at 236p and 414p respectively, and then sold them at 1886p and 1881p respectively.

They took GBP 4 million and GBP 1.76m respectively out of Dana Petroleum (DNX, 1037p) within 5% of the high (1972p in May).

So it is interesting to see a whisper of positive news just this last week as two directors buy shares.

Brian Johnston, a non exec, on October 8th bought 6000 shares at 908p, inititaing a position in the company.

Two days later, on October 10th, Stuart Paton, the Technical and Commercial Director, bought 9179 shares at 894p, taking his position to 32,529 shares.

Between them they have committed GBP 137k to the company, which is minimal when compared with the money taken out by the CFO and CEO in June.

It is however an important signal to investors, which may establish a level of support for the shares.

Please also note that we have recently seen hesitant director purchases in other natural resources stocks including Xstrata, Cairn Energy, and Premier Oil.

View on Dana: Positive, Directors are buying shares

Strength of Signal: Medium

See comment of October 19th: Dana Petroleum – CEO invests at 853p having sold at 1886p in June.

ITV – now five directors have bought shares- upgrade to STRONG signal

October 15, 2008 in Directors buying, FTSE 250 company, STRONG signal | Tags: , , | Leave a comment

On September 26th in ‘ITV directors dip their toes in the water- add to watchlist’ I noted purchases by three directors/senior managers at ITV (ITV, 39.5p) . I wanted to see further purchases before I bought the shares.

Over the last fortnight two non execs have also bought shares, in limited size, taking the number of directors buying shares to five.

Heather Killen, non exec, on October 1st bought 22,000 shares at 43p, initiating a position, and on October 9th Agnes Touraine, also a non exec, bought 100,000 shares at 37.5p.

Although these are relatively small purchases in $$ terms, it should be noted that all the five directors who have purchased shares (Griffiths- CFO, Fincham- Director of Television, Russell- Deputy Chairman, Killen- non exec, and Touraine – non exec) have initiated positions in ITV in the last month.

As a result of this, and the number of directors buying shares, the recent transactions act as a STRONG signal to investors.

View on ITV: POSITIVE- Directors buying shares

Strength of Signal: STRONG

Link to all comments on ITV.

Are directors buying shares?

October 14, 2008 in Market musings | Tags: , , , , | 1 comment

[See also May 4 post: ‘Directors share sales outnumber buys- Is the market expensive?’]

[See also subsequent post on October 31st: ‘ Directors ARE buying shares. Buys vs Sells 10:1’]

A question many of you have is whether directors are currently buying shares, and presumably does that indicate a turning point in the market?

The straight answer is ‘no more than usual’.

If you use digitallooks excellent visual tools facility, you can ask them to show you the number of directors buying or selling over a certain period.

As at last Friday, the number of companies in the FTSE 350 indicating net directors dealings over GBP 50k over the period I asked for (1, 3 and 12 months) were as follows:

1 month to October 10 2008:

26 companies showed net selling over a cumulative GBP 50k, and 32 companies showed net buying.

3 months to October 10th 2008:

58 companies showed net selling, and 54 companies net buying

12 months to October 10th 2008:

144 companies showed net selling, and 130 companies net buying.

I’ve just today run the analysis for the last seven days (to October 13th) and it shows

4 companies showing net selling, and 9 companies showing net buying.

I believe that this is not statistically significant due to the short period and the low number of companies exhibiting activity. Please also bear in mind that digitallook uses data as announced by the stock exchange, which will include the receipt by directors of scrip dividends, share options, and Incentive Plan subscriptions.

In followthedirectors research I exclude all Incentive Plan and dividend receipts, and any sales that are made to pay tax on options exercised. I aim to look at shares sold to receive cash, or shares bought with cash.

For a list of directors dealing activity use the category criteria on the top left of this page, or click on the following: Directors Buys, Directors Sales.

Three AMEC directors bought shares last week – strong message

October 14, 2008 in Directors buying, FTSE 100, STRONG signal | Tags: , | Leave a comment

On April 25th we saw Samir Brikho, CEO of Amec (AMEC, 525p), increasing his holding by 50% and investing close to GBP 500k ‘Amec– a difference of opinion CEO buys, CFO sells.’ 

 

On Friday October 10th Brikho bought a further 50,000 shares at 497p, investing GBP 250k, taking his holding to 232,000 shares.

Other directors have also been active:

October 7th Non executive Tim Faithfull buys 5000 shares at 533p, doubling his holding to 10,000 shares, and

October 8th, Jock Green-Armytage, Non executive Chairman, increases his holding by 50% by buying 5000 shares at 509p.

Also in September Ian McHoul, the new CFO, bought 9000 shares at 746p to take his holding to 60,000 shares.

In the three months after Brikhos April 25th purchases, Amec outperformed the FTSE 100 by 30%. They have now given up all that outperformance against the index, and with the share price near 500p represent another opportunity.

View of Directors dealings: Positive signal with three directors buying in the last week.

Strength of signal: Remains STRONG

For all Amec comments click here.

Safe as houses? Persimmon non exec buys shares for family

October 14, 2008 in Directors buying, FTSE 250 company, WEAK signal | Tags: , , | Leave a comment

Back in May this year four executive members of the board (White, Farley, Kiloran and Bryant) of Persimmon (PSN, 377p) sold shares at 567p. Within eight weeks Persimmon shares were trading at 220p.

On September 30th we saw the first purchase of shares at Persimmon by the senior independent non executive director David Thompson. Mr Thompson invested almost GBP 80,000 for various members of his family by buying 20,000 shares at 398p.

Thompson increased his (and his familys’) holding in Persimmon by 50%, taking their holding to 60,000 shares.

These purchases don’t score highly on my ‘significance’ rating, because only one director is buying shares. I thought it worth recording though due to the size (GBP 80k) and the increase in shareholding (50%).

View of directors dealings: Positive- director is buying shares

Significance of the transaction: Low / Weak as only one director buying shares

Xstrata non execs catch a falling knife by buying shares.

October 13, 2008 in Directors buying, FTSE 100, MEDIUM signal | Tags: , , | 1 comment

Two non execs have decided enough’s enough, and ‘caught the falling knife’ by buying shares in Xstrata (XTA, 1310p).

Ian Strachan on October 2nd bought 5700 shares at GBP 17.19, investing GBP 97k and increasing his holding by over 60%. His colleague Claude Lamoureux on October 9th bought 4000 shares at GBP 13.78, investing GBP 55k. I don’t think he held any shares prior to this purchase.

If we look back to earlier this year, a number of executive directors including Trevor Reid (CFO), Santiago Zalmdumide (Executive Director), and Michael Davis (CEO) all exercised options and sold all their shares at between 3470p and 4342p (source: Company website, Digitallook, London Stock Exchange)_ Usual behaviour by directors is to sell a number of shares sufficient to pay the tax on the exercised share options, usually 40%. I’m not sure what the tax liability would be for these directors.

A sale of all the shares exercised indicates to me that they thought the shares were fully valued. How right they were. The share price of Xstrata fell from a high of 4420p in May to 1223p last week. 

Are the purchases by the two non execs of significance? Yes, they are significant in $$ terms, in terms of increase in shareholdings, and there are two directors acting.

Value of signal: Positive- Directors buying shares

Strength of signal: Medium

HSBC – directors sell- ‘credit tightening’ now hitting China growth

October 12, 2008 in Directors selling, FTSE 100, MEDIUM signal | Tags: , , , , , | 3 comments

In HSBC (HSBA, 790p) I see a strong, well managed, diversified global bank, with a higher exposure to the growth markets of Asia than its (now nationalised) compatriots on the London Stock Exchange.

I notice though the first significant signs of Chinese slowdown in the announcement on Thursday by Australia Iron Ore producer Mt Gibson (MGX, 71c)  that their Chinese customers want to delay shipments.

In their statement (link to co website) Mt Gibson say ‘ Customer and iron ore sector analysis indicates a slow down in demand for iron ore in China due to current economic uncertainty and the tightening of credit facilities’.

Whose ‘credit facilities’ I wonder, the Chinese or their Western customers? 

I also notice directors share sales at HSBC, wth a DD John, a ‘PDMR’ (senior manager but not group board member) selling 61434 shares at 907p on October 1st.

Reviewing other directors sales over the past twelve months I find  sales taking place at between 766p and 884p between October 2007 and June 2008 totalling around 400,000 shares or GBP 4m.  Directors who have sold include Hughes Hallett (non exec), Almeida (non exec), Green (Chairman), Flint (CFO), and Geoghahan (CEO). For full details go to www.digitallook.com or to the HSBC company website.

I wonder how long HSBC can weather the storm that banks in the rest of the world are currently embroiled in. I think the price levels at which share sales by six directors took place are a good indicator of a medium term peak level for HSBC shares.

Signal: Negative- Directors selling

Signal Strength: MEDIUM

October 17: Anecdotal information on the Chinese economy from a contact in Hong Kong:

Second largest Chinese port shows exports down 14% since July.

40% of the Chinese toy companies are now insolvent.

Also see: ‘Credit crisis casts gloom over China’s exporters’ (October 14th, Associated Press)

For subsequent comments on HSBC (November 10th and November 14th) see here.

 

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