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Eaga (EAGA, 112.5p), the UK heating system provider for social housing, has announced that the CEO and CFO are each selling 1.1m shares ‘to satisfy tax liabilities incurred at IPO which are due shortly, ……..and to provide an element of liquidity‘ (Company statement November 25th, source London Stock Exchange).
In April eaga directors bought shares, taking advantage of a depressed share price resulting from costs concerns primarily related to copper prices. This prompted us to look at eagas valuation, and its comparison with Connaught (CNT, 366p), a similar company, where directors had been selling shares.
Since April 30th ‘Connaught (directors selling) vs Eaga (directors buying)‘ Eaga are down 13.5%, the FTSE 250 index is down by over 40%, and Connaught are down 8.67%.
If the CEO and CFO are selling shares, then maybe we should also.
So we close our positive view on eaga with a 27% relative performance vs the FTSE 250, and a -5% relative performance vs Connaught.
View on eaga- Negative – directors selling shares.
Strength of signal- Medium
For all followthedirectors comments on eaga click here.
Share transactions:
John Clough CEO sold 1.1m shares at 110p taking his holding to 5.236m shares.
Ian McLeod CFO sold 1.1m shares at 110p taking his holding to 3.982m shares.
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