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John Wood Group plc (WG., 236p) have outperformed the market since directors bought shares in October 2008 (up 32% absolute, up 5% relative) and December 2008 (up 27% absolute, up 10% relative) (for the followthedirectors comments on October 28th (179p) and December 10th (185p) click here).

Last week we saw Mark Papworth, an Executive Director of John Wood Group, exercise options over 50,000 shares at 3.3p, and sell them all at 247p. (April 24th, source London Stock Exchange).

We at followthedirectors view this negatively. A sale of sufficient shares to pay for the tax liability on the options exercise would be seen as neutral. A`sale of a greater number of shares is treated as a net sale, in this case of around 25,000 to 30,000 shares. This follows 16 individual cases of share purchases since October 2008 by directors of John Wood Group.

View on John Wood Group plc: Neutral- close positive view of October 28th and December 10th 2008.

Strength of Signal: Weak

Only a day after being appointed a non exec of Cairn (CNE,  1806p), Dr James Buckee has invested GBP 35k by buying 2000 shares at 1762p.

‘Dr Buckee was previously President and Chief Executive Officer of Talisman Energy Inc. Dr Buckee holds a BSc Honours in Physics from the University of Western Australia and a PhD in Astrophysics from Oxford University’ (Company website).

In October 2008,  six directors of Cairn invested just shy of GBP 480k at 1816p. See ‘Cairn Energy – Directors buyback closes negative view with 45% return’.

Since then Cairn have outperformed the market (FTSE 100) by 9%.

In April 2008 two non exec directors of Cairn sold shares at 2915p, and in May six directors sold shares at 3366p. From April to October Cairn fell 45%, which was 20% more than the market. See ‘Cairn Energy- non execs reduce holdings substantially’.

Based on historical performance,  I believe that any dealing activity by Cairn directors is worth listening to.

View on Cairn: Positive

Strength of signal:  Medium, no change from our comment of October 9th 2008.

News ahead: Operational Update from Cairn tomorrow (!) January 20th.

For all our comments on Cairn click here.

Only last week, October 15th, followthedirectors wrote ‘Technical director thinks DANA Petroleum undervalued‘.

One day later. the CEO Tom Cross, and one of the non executive directors Philip Dayer, also bought shares in Dana Petroleum (DNX, 831p).

Non exec Philip Dayer bought 5787 shares at 864p, taking his holding to 9387 shares. CEO Cross bought 43490 shares at 853p, taking his holding to 1,044,890 shares.

So this isn’t a significant move on Cross’s part. But when you look at the $$ amount invested (GBP 370k), and the coincidental purchase of shares by three other directors in the week (Brian Johnston non exec, and Stuart Paton Technical and Commercial Director, as well as Dayer above), then Dana Petroleum starts to look interesting.

Also remember (see link to comment above) that Cross and his CFO McFarlane were diligent enough to exercise and sell shares in June at near to GBP 19, within 5% of the high for Dana. You have to give them some credit for their timing.

View on Dana: Positive, directors buying

Signal Strength: STRONG (up from Medium) on the news that now four directors out of the board of eight are buying shares.

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.

I’m back from my hols. The last time I went sailing I returned to find my portfolio hit by close on 50% due to a severe inventory shock at Nokia handsets. This time it’s probably almost as bad, although I haven’t dared log in to check yet.

I’ll warn you the next time I’m on the water!

I notice that Cairn Energy (CNE, 1582p) directors have been buying shares (see Sharecast article ‘Cairn Energy Bosses buy in’ here). If you look at the purchases though, you’ll see that although between them they invested GBP 480k, the directors have increased their position sizes by less than 10%. This is not sufficient to warrant a STRONG signal with a positive angle, but would warrant a MEDIUM signal due to the high number of directors buying (seven in total).

Lets now go back to April 7th this year, when I wrote ‘Cairn Energy- non execs reduce holdings substantially’. Four directors had sold shares, including the CEO Gammell and the director of exploration Watts (read the full article by clicking on the link above). The big important message to the market was provided through share sales by non execs Murray and Hart who sold between 1/3rd and half their holdings

Back then the share price was 2915p. Cairn are now 1582p.

That is a fall in the value of Cairn Energy shares of 45%. Over the same period the FTSE 100 index is down by 25%.

So if you listened to the directors message (not mine- it’s the directors that sold shares, they provided information to the market through their actions) in April, and sold your Cairn shares, I’d be happy now to close that short/sale with a 45% return.

Thankyou Norman Murray and Todd Hart.

Signal: directors buying = positive

Signal strength: MEDIUM ( many directors buying but insufficient size to warrant a Strong signal)

For all Cairn comments on this site click here, or enter ‘Cairn’ in the search box to the left.

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