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Directors dealing news this week has been like the number 19 bus. None all week, and then they all come at once, on Friday. Let’s start with Diageo:

Paul Walsh, CEO of Diageo (DGE, 1017p) has sold again, this time selling 39148 shares at 1001p, taking his holding to 644,000 shares.

I have earlier commented (see here) on Walsh’s fortuitous timing in selling down his position, and will now put some numbers to show his success:

Date/Sale price/3 month performance relative to FTSE 100/Note

30/10/07 1100p. +2% Sale post options exercise

15/2/08 1081p -12% Outright sale

18/2/08 1068p -13% Outright sale

1/4/08 1050p -8% Sale post options exercise

9/5/08 1040p +8% Sale post options exercise

29/8/08 1001p ?? Outright sale

I think you can see where I’m coming from here.

Walsh’s timing has proven to be pretty good historically. I wouldn’t be buying DGE here.

Signal Strength remains MEDIUM

On April 3rd I highlighted Mr Walshes last sale of Diageo (DGE, 1047p) shares (see commentary here).

I was particularly impressed with the fortuitous timing that Mr Walsh seemed to have shown with his previous share disposals.

Since April 3rd, Diageo shares are down 1% absolute, or down 6% relative to the FTSE.

I see no reason that May 9ths sale by Paul Walsh of 125,000 shares at 1040p shouldn’t be a continuation of either his good luck or expert timing.

I want to recap here posts that I wrote last month, with the absolute and relative performance of shares to today. To see the original posts I am referring to, look for the title to the left of here, or type the company name into the ‘Search’ box.

April 3rd Diageo DGE 1055p NEGATIVE CALL -1.6% absolute, -7% relative

Negative call based on the news that CEO Walsh had sold £1m of shares, and upon reviewing his historical sales, found him to have excellent market timing.

April 7th Cairn Energy 2915p NEGATIVE CALL +5.4% absolute, +1% relative

Negative call on news that Non Exec Chairman had sold half his holding in Cairn

April 25th AMEC AMEC 752p POSITIVE CALL +9% absolute, +7% relative

Positive call on news that CEO Brikho had increased his position by 50%. buying £483k of shares

April 25th EAGA EAGA 135p POSITIVE CALL -13% absolute, -19% relative

Positive call based on directors buying in a vacuum of information or market knowledge on Eaga.

April 25th Galiform GFRM 71p POSITIVE CALL +18% absolute, +12% relative

Positive call based on intriguing market timing, namely CFO buying shares for the first time since joining the board in 2005, in an environment of negative news from the housebuilders.

April 30th Connaught CNT Eaga EAGA -4.5% relative

Switch suggestion (long term ‘2-3 sets of results’) from CNT into EAGA based on director selling in former, and buying in latter, as well as significant valuation differences

Paul Walsh

I see Paul Walsh, CEO of Diageo (DGE 1055p) has sold just under a million pounds of shares, resulting from an options exercise the same day.

Looking back, he always sells pretty much all the shares he receives as a result of exercising his options, not just a portion sufficient to pay the tax, so behaviourally this is no change from previous sales.

What I did notice though is that he has been very clever at hitting all the peaks in the Diageo share price chart over the last two years.

To best see this, go to digitallook.com, search for diageo, draw a chart, and overlay directors dealings.

The chances are that he’s done it again this time, and 1055p may well be the recent peak of Diageo for a few months.

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