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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.

 

Up almost 50% from Julys low (730p), Rathbone (RAT, 1060p) (chart) are seeing a couple of their Executive Directors take advantage of a strong share price to reduce their exposure.

Richard Smeeton has sold (on 19/9/08) 12,000 shares at 1035p taking his holding to 115,673 shares, and Andrew Morris has sold (23/9/08) 11,791 shares at 1063p, taking his holding down to 41,268 shares.

Another two directors (Ian Buckley and Richard Loader) have also sold, but in much smaller size. 

These trades echo selling at Hargreaves Lansdowne (see my posts here), also up 50% from the lows, where three directors continue to sell.

Four directors selling, but not a significant portion of their holding, warrants a MEDIUM strength signal. The risks lie on the downside.

Addendum October 14th:

Further sales have been reported as follows:

Clive Hexton, on the board of Rathbone Investment Management, has sold 5200 shares at 983p taking his holding to 8700 shares (October 6th), and

Hugh Adlington, at Rathbones Investment Management London, has sold 10,000 shares at 987p, taking his holding to 44,000 shares (October 3rd).

Wow. Aren’t you exhausted? What a week that was. Thrilling too. You never knew what was going to come at you next!

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We’ve seen a few sells this week. Stocks worth noting for directors selling activity are Savills (SVS), De La Rue (DLAR), and Hargreaves Lansdown (HL.).

Savills (SVS) directors have been a pretty good signal for future share price performance, but the disclaimer must be ‘the past is no guide to the future, you can lose everything in the stock market’. On the positive side availability of capital should lead to some pick up in activity in real estate, on the negative side look at Savills huge cost base.

Hargreaves Lansdown (HL.) directors say ‘Volatility will impact profit growth’. CFO and Head of Accounting have been selling.

De La Rue (DLAR) CEO and CFO both sold this week, taking profits in a stock which is up 50% relative to the FTSE 250 index. Maybe the good news is all in the price.

On the buy side:

Shire (SHP) directors have been consistent buyers. They have a track record. And five of them are buying. Definitely worth a look.

New World Resources (NWS) fall of 50% in the last three weeks has prompted a number of directors to buy. This coal miner and coke producer is, of course, highly vulnerable to a slowdown in economic activity. The directors seem to be more confident than the stock market.

Heritage Oil (HOIL). We’ve seen a number of buyers in small oil companies over the last two to three weeks, including ROC, Arawak, Heritage, and Serica. This may signal a support level for the energy sector.

And what about Prudential (PRU)? Mark Tucker CEO invested GBP 100k on Monday 15th September at just shy of 500p. He bought 20,000 shares taking his holding to 1.5m shares. I don’t interprete this transaction to be a valuable signal as

  1.  
    1. Only Tucker is buying, no other directors, and
    2. This is a tiny increase in his existing holding. 

Granted, he is up 20% on GBP 100k in a week. Time will tell.

Enjoy the week ahead. Keep calm and think of the long term.

Over a tense weekend for the 25,000 employees of Lehman, praying for a rescue package, I spot further director selling at Hargreaves Lansdown (HL., 191p).

On September 9th we saw the CFO Martin Mulligan and his Accounting colleague Tracy Taylor selling down less than 10% of their holdings.

On September 11th the Group Compliance Director Nigel Bence sold almost a third of his holdings, selling just over 250,000 shares held in his and his wifes name, to leave them with 561,207 shares.

HL were up more than 50% from their low. With equity trading volumes falling and the US heading for months of financial turmoil as a fallout from the (likely) collapse of Lehman (FT comment), I consider the risks lie substantially on the downside, and suspect Bence, Mulligan and Taylor would agree with me. As management concluded in their results presentation last week: ‘Volatility will impact profit growth’. That volatility is not yet receding.

For my last comment on Hargreaves Lansdown of September 12th ‘Volatility will impact profit growth’ see here.

With a third director selling, I now consider the value of the ‘signal’ from directors dealings to be STRONG.

Addendum Sept 24:

Further selling by CFO Martin Mulligan (sold 142k shares at 202p 19/9) and Head of Group Accounting Tracy Taylor (sold 30k shares at 200p-204p 22/9) reinforce the signal on Hargreaves Lansdown.

I’ve looked at the Hargreaves Lansdown (HL. , 190p) share price performance since the results on August 27th. The shares moved from 161p to a high of 209p, and are now off the top at 190p.

So a more than 25% uplift after a great set of results (to June 2008). Of note was an increase in assets under management, and an increase in the proportion of income that is recurring, up about 4% points to 72%.

I then looked at the slides from the analyst presentation, and recount here from the ‘Conclusion’ slide:

‘Resilient business’

‘H-L is well positioned in the market’

‘Volatility will impact profit growth’

‘….but long term prospects remain very positive’. 

I also notice a comment on FT’s Alphaville quoting a Citigroup report that shows a marked slowdown in global stockmarket activity n August, down 37% in value vs last year.

And I then understand why on September 9th the CFO of Hargreaves Lansdown Martin Mulligan has taken some money off the table by selling 200,000 shares at 193p, taking his holding to 2.1m shares. His colleague Tracy Taylor, Group Accounting Director and Co Secretary, has also sold, 65,000 shares at 193p taking her holding to 932,000 shares.

Of note is Mulligans past trading activity. He sold 1.2m shares in September 2007 at between 208p-210p. HL shares subsequently fell to 135p in January.

So maybe ‘volatility will impact profit growth’ is the line to focus on for the next six months.

Signal strength: MEDIUM

Link to Hargreaves Lansdown Investor Relations site.

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