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Yesterday Carnival (CCL, 1411p) announced hat two directors had sold shares.

In fact both Peter Ratcliffe, Board director, and David Dingle, CEO of Carnival UK, had both exercised options and sold the resulting shares, Ratcliffe realising GBP 240k, and Dingle realising GBP 45k.

If a director sells sufficient shares to pay his/her taxes due on the options exercise then I consider the transaction a ‘neutral’ one. If a director sells all the shares exercised then I consider it a disposal, and a negative indicator.

So these transactions I view as negative for the shares. Ratcliffe realised GBP 150k earlier this month through a sale of  12,500 shares.

Directors have been selling since August last year. Carnival shares have performed in line with the market over the period.

View on Carnival: Negative

Strength of Signal: STRONG

For all previous posts on Carnival see here.

Carnival Cruise Lines (CCL, 1420p) are being squeezed.

‘The average passenger’s age is 45+’ (http://cruises.about.com), and those potential customers of Carnival are being squeezed in their spending power by falling interest rates, falling pension and savings valuations, and other pressures on them such as highlighted in Saturdays Telegraph:

“A Daily Telegraph survey – the first of its kind since the recession began – highlights the heavy toll being taken on Britain’s so-called “Babygloomers”.

Almost one in ten adults are having to contribute to their parents’ upkeep, the research found. The Norwich Union research suggests more than 1.3 million adults aged between 17 and 65 are paying their parents more than £250 each month, with some paying up to £1,000.

Many pensioners have found themselves struggling as their income from savings has virtually disappeared following the drop in interest rates. As a result, they have been forced to turn to their children for help” (Telegraph.co.uk February 14th 2009).

Carnival directors Howard Frank and Robert Dickinson were sellers back in June and August last year, raising over $4 million between them through share sales.

Peter Ratcliff, the former CEO of Princess Cruises Intl, on Febraury 2nd sold 12,567 shares at 1245p, raising over GBP 150k.

The stock since August has performed in line with the market, in my view rescued by falling oil prices. I can imagine that booking a cruise has a long lead time, so any bad news on Carnival is likely to appear later in the consumer cycle rather than sooner.

Carnival cut their dividend in November, saving over $1bn a year.

I continue with my negative view on the shares, with a ‘STRONG’ signal from directors share sales.

For all posts on Carnival click here.

Directors Buying signalling market bottom?

I was surprised on Friday to see such a turnaround in directors sentiment ‘Directors ARE buying shares. Buys outnumber Sells 10 to 1’.

Data on Directors Dealings from Digitallook (site here) showed that over the month of October Directors Buys in the FT 350 companies outnumbered Directors Sells by almost 10:1.

This is a sharp change from data I ran on October 10th, which showed Buys and Sells at similar levels for the prior month.

Is this a turning point for the market? What is the precedent?

I used the Digitallook Screening Tools product to screen for Directors buys over GBP 50k, and sells over GBP 50k, and looked at the market turn in early 2003, when the FTSE rallied by 1/3rd in 12 months.

Through 2002 and 2003 Buys to Sells are in the ratio of between 1:1 and 2:1 for most of the month periods analysed.  In August and September 2002 this jumped to 4:1 and 3:1 respectively, then fell back to 1 1/2:1 and 2:1 for the following two months.

In December 2002 the Buy to Sell ratio popped up to 5:1, and the market didn’t look back for 30%, rallying 900 points to 4500 over the next twelve months. 

The ratio of Directors buys to sells dropped back in January, but was consistently in the 1.5:1 to 2:1 range for the subsequent six months. 

Is it time to buy the market now? All I can say is that investors today have substantially less confidence in the information available with which to make investment decisions. With this information vacuum, I believe that Directors Dealings play a more substantial role in telling us what is going on inside companies.

UK Engineers. 30 Directors buying shares.

The market killed the UK Engineering stocks on news of dismal results and orders in the truck and autos sector, and also justified concern that expansion at mines and oilfields will be delayed, trimmed back, or pulled completely.

So it is with interest then that we’ve seen, over the last two weeks, a substantial number of directors buying shares in GKN, IMI, Weir, John Wood, Bodycote, Laird and Senior.

I don’t know much about these companies, but I do know they are often the world leaders in their product areas, that historically they have been pretty good at generating cash, and have also attracted bid attention in the recent past (Bodycote).

And I also know that the 30 directors who have bought shares know a lot more than me about the valuation of their businesses.

For all comments by followthedirectors over the last week on the companies mentioned above see here.

Misys CEO Buys $350k stake in Allscripts.

If you are a Misys investor you should ask your broker about Allscripts (MDRX). Is Allscripts a cheaper way to buy a faster growing portion (Medical) of Misys’ business?

CEO of Misys, Mike Lawrie seems to think that Allscripts is the way to go. He has invested $350k in the group (our comment here). Misys now own more than 50% of the company which has 60m shares outstanding. Bloomberg show a short position of 6m shares, so this could prove to be rather interesting in both the near and long term.

Carnival dividend cut.

I wondered how long the bad news would take to come out of Carnival, the cruise business. They have suspended their dividend, saving $1bn + a year. 

In June and August the CEO and COO took $4.5m out of the company. CCL is down 23% since our comment of August 5th ‘Chilling out or downside risk’, underperforming the FTSE by 5%. I suspect we’ll see further negative comment on bookings over the next few months.

 

Disclosure: The author has positions in Misys, Weir, IMI, Senior, Laird, Bodycote, John Wood.

Carnival yesterday August 11th announced further director selling. I believe this to be a significant negative indicator. Please go to this post for full details.

Robert Dickinson, a board member and former President and CEO of Carnival Cruise Lines at Carnival (CCL, 1793p) is using the recent bounce in the share price from a low of 1450p to sell down his holding in the Carnival and P&O cruise line business.

On June 24th he sold 18,000 shares at 1761p, realising £317,000.

On August 1st he sold 40,000 shares at 1864p, realising £715,000.

This leaves him with 160,000 shares in CCL.

Is Dickinson planning a cruise for his retirement, or does he think that the risks are on the downside for CCL ?

August 11th: Carnival announce that on August 8th Howard Frank, Vice Chairman and Chief operating Officer sold 66,000 shares at an average price of $ 39.6159    taking his holding in Carnival to 294,416 shares.

So now Frank and Dickinson between them have taken about $4.5m or £2 1/4m out of Carnival shares in the last 8 weeks. Not a positive indicator for the shares.

The ‘strength of signal’ derived from directors dealings moves from medium to STRONG.

I tend to concur with the Telegraph article of 29th June ‘Carnival shares no safe harbour’. Link to article here.

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