You are currently browsing the tag archive for the ‘IMI plc’ tag.

Lets start with the good news!

We’ve closed our cautious view on HSBC (November 14th article here), with a 10% absolute return or a 20% relative return over a month. We linked directors share sales with an expected increase in negative newsflow over China’s economy, and saw the shares weaker to reflect this. Maybe this is too short term a view, especially with reports that Chinas power generation ‘in October is down 4% from a year earlier‘ (The Australian October 15th).

Allscripts (MDRX) has exhibited further director buying activity this week, with Misys non execs John King and Sir Dominic Cadbury buying 10,000 shares each at $7.23 and $7.27 respectively . This is in addition to the Allscripts CEO Glen Tullman buying 100,000 shares at $5.11 on November 4th, and Misys CEO Mile Lawrie buying 70,000 shares for $5.09 on October 27th. Allscripts are a NYSE listed company, majority owned by Misys. Allscripts shares are up 39% since our article of October 30th.

I was intrigued by Babcock, where the CEO Peter Rogers bought shares for the first time in four years this week (see ‘Babcock CEO buys shares‘). This brings to seven the number of UK engineering companies where we have seen significant director buying activity, namely Babcock, Weir Group, IMI, Senior, Bodycote, John Wood and GKN. Which brings me to the bad news.

Only a couple of weeks ago, on October 28th, Nigel Stein, CEO of GKNs Automotive division, bought 84,000 shares in the group at 100.5p, taking his holding to 209,000 shares (see ‘Head of GKN Automotive doubles shareholding‘). Then along comes another profit warning, to the effect that orders have collapsed in two divisions, one of which is Automotive, in the last seven days. The stock price fell from 107p on Thursday to close at 87.5p on Friday. If Stein doesn’t know what’s going on, who does?

Another company that loves profit warnings is Rentokil, ‘the royal rat catcher’. I suggested in ‘Rats, Ships and Rentokil’ that a share sale by the Divisional Managing Director of Asia, David Liu, might be the precursor to further negative newsflow.

Lastly, in the small cap arena, Directors of TT Electronics were seen to accelerate share purchases, buying six times as many shares in October as they had bought in the previous 12 months. The next news on TT is likely to be a pre close statement in late December. See ‘TT Electronics sees an acceleration in directors buying activity’.

News Ahead

November 19th sees IMIs Interim Management Statement. I expect this to be positive in light of recent director buying activity. But after Fridays warning from GKN, who knows.

And November 26th is the scheduled date for De La Rues Earnings release. Remember that the CEO and CFO raised about GBP 1 million between them by selling shares in mid September (‘Currency Printers Cash In’). The shares have outperformed the FTSE 250 by 17% since then. Citigroup apparently downgraded the stock last week in anticipation of falling emerging markets revenues (Guardian November 10th). I agree, I think the risks are on the downside for De La Rue.

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.

Five Executive directors at GKN plc (GKN, 126p) have bought 386,000 shares between them this week, increasing their shareholdings in the group by 75% to around 896,000 (Source: London Stock Exchange).

Those directors are:

CFO William Seeger, CEO Sir Kevin Smith, CEO of Powder Metallurgy Andrew Smith, CEO of Aerospace Marcus Bryson, and CEO of Automotive Nigel Stein. It’s particularly encouraging to see Stein investing here, in view of the recent profit warnings from the car makers globally.

Stein bought 84,000 shares at 100.5p on October 28th, taking his holding to 209,000 shares.

Andrew Smith and Marcus Bryson were sellers near 330p in August 2007, so buying shares at 109p must feel good. Unfortunately CEO Sir Kevin Smith was not quite so savvy. He paid 360p in March 2007.

So GKN join the merry band of UK Engineering companies exhibiting director buying activity: Weir Group, Bodycote, John Wood, Senior and IMI.

See ’25 Directors buy shares in UK Engineering Companies’ (October 28th followthedirectors.co.uk)

View on GKN: Positive- Five directors buying shares

Signal Strength: STRONG- Five directors buying, investing GBP 400k between them, increasing holding by 75%

I’m not talking about the big cap FTSE 100 stocks here, but smaller FTSE 250 companies that are the global leaders in their field of specialty engineering.

Many of these companies have grown from a UK engineering base to have globally spread customers. They may also be companies with less near term economic exposure, protected by longer lead times, and also big beneficiaries of a weak Sterling.

It is unusual to see so many companies in one sector showing directors purchases, most of which have occurred in the last ten days. The directors clearly think trading conditions are better than those indicated by the share valuations in the stockmarket.

Weir Group (WEIR, 295p) : Three directors have invested GBP 350k in last two months.

Provider of engineering solutions (pumps, valves, pipelines, maintenance etc) to the mining, oil and gas, and power generation markets worldwide.

10x Half year 2008 operating cash flow. GBP 620m mkt cap.

Senior plc (SNR, 42.5p): : Six directors have invested GBP 70k in last two months.

Senior designs, manufactures and markets high technology components and systems for the principal original equipment producers in the worldwide civil aerospace, defence, diesel engine, exhaust system and energy markets.

6.8x Half year 2008 free cash flow. GBP 170m mkt cap.

IMI plc (IMI, 269p) : Three directors have invested around GBP 80k in last two months. 

IMI is an international engineering company, which operates primarily in the fluid controls and retail dispense areas. Fluid controls covers pneumatics, severe service valves and indoor climate products and services, while retail dispense includes beverage dispense and merchandising systems.
13.4x Half year 2008 operating cash flow. GBP 860m mkt cap.
John Wood Group plc (WG., 179p) : Four directors have invested over GBP 1m in the last week.
The international energy services company provides the oil and gas and power generation industries with engineering design, production support and industrial gas turbine services.
10.7x Half year  2008 operating cash flow. GBP 950m mkt cap (in FTSE 100, not FTSE 250).
Bodycote plc (BOY, 122p): Five directors have invested GBP 400,000 in last two months.
‘Bodycote is the world’s largest and most respected provider of testing and thermal processing services: Heat Treating, Hot Isostatic Pressing, Metallurgical Coatings and Testing – operating in 30 countries’ (strategy page on co website).

13.8x First half 2008 operating cash flow. GBP 400m mkt cap.

Read ‘Can Sulzer come back and bid for Bodycote? Ask the directors’  published at followthedirectors October 28th 2008.

Laird plc (LRD, 153p): Four directors have invested around GBP 70k in the last week.

Laird plc‘provide technology for an increasingly connected world’ in the form of  Electronic Components and Antennae enabling wireless connectivity (see co website for the lowdown).

10x First half 2008 operating cash flow. GBP 280m mkt cap.

Read: ‘Confident Laird directors delve into their pockets’ October 28th 2008 followthedirectors.

 

Disclosure: I have positions in Bodycote and Laird

Information sources: Company websites and London Stock Exchange.

IMI plc’s (IMI, 268p) CEO MJ Lamb has started to buy back shares in his company (co website).

Martin Lamb sold 105,000 shares at between 513p and 517p back in May this year. IMI are now trading at almost half that level now, in the 260p’s.

Lamb is dripping his money back in: Mrs Lamb bought 10,000 shares at 288.5p on October 14th. Lamb himself bought 5000 shares at 260p on October 24th.

Lambs colleague, CFO Douglas Hurt, has also been putting a few $ to work, with his wife buying 6500 shares at 288.5p, also on October 14th.

If you take a look at the IMI fact sheet (1MB download) you’ll see a group with a geographically diversified sales profile, which could presumably be a longer term beneficiary from weak Sterling.

View on IMI plc: Positive, directors buying

Signal strength: MEDIUM – requires a larger $$ amount to be invested, as well as more directors, to warrant a Strong rating.

Add to Technorati Favorites

Prefer to get emails? Click here

RSS Find us on twitter.com/directorsdeals

  • An error has occurred; the feed is probably down. Try again later.

twitter

September 2020
M T W T F S S
 123456
78910111213
14151617181920
21222324252627
282930  

twitter