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Wow- ‘Liberty undermined by fundraising chatter’ (Independent)’ (LII, 365p)

Sounds very underhand to me.

But wait – only a month ago, Liberty International announced results and said they ‘intend to take further action to improve our liquidity and financial strength, including potential further asset sales and new capital raising’ (February 26th Liberty International Preliminary Results announcement).

Judging by the share price since then, the bears have been covering their shorts (Liberty up 15% from Feb 25th to last night, FTSE unchanged) , and we are reminded through market gossip that the capital raising is imminent.

The cynic in me says that Goldman are not involved, hence the move to a SELL with a target of 302p (Independent article). Where were you Goldman when the price was near 1000p in August last year, and senior management of Liberty were selling shares?

Since our note on August 31st (link below), Liberty International are down 62% in absolute terms, or down 44% relative to the FTSE 100 index.

The ‘directors selling’ signal was reinforced in January 2009, when we saw Harold Newton and William Black selling shares.

Hopefully all will be revealed in the next few weeks, maybe as soon as the Company’s EGM on April 1st (EGM notice here).

Look for opportunities to close the negative view on Liberty International below 300p.

Click here for all Followthedirectors comments on Liberty International:

January 11th, 522p: Liberty International shares continue to be vulnerable

August 31st, 984p: Liberty International- PDMR selling

February 20th, 958p:Liberty Internationals Gordon buys shares. So what.


Back in August last year, we noticed that despite excitement over a potential bid for Liberty International (LII, 522p), senior management in the form of a Harold Newton was selling shares. Unusual behaviour if you think there could soon be a bid on the table (see August 31st ‘Liberty International- PDMR selling’).

Since our caution, Liberty International have underperformed the Real Estate sector by around 20%, and the FTSE 100 by over 30%.

We believe Liberty International shares will continue to be vulnerable:

December 17th 2008 Harold Newton, a PDMR of Liberty, sold 19,000 shares at 495p taking his holding to 74,000 shares. Also

December 23rd and 24th William Black, also a PDMR of Liberty, sold 10,000 shares at between 482p and 488p, taking his holding to 100,000 shares.

View on Liberty International: Negative

Strength of Signal: Medium

For all comments on Liberty International (LII) click here.

There’s been a lot of hype surrounding Liberty International (LII, 984p) recently, with two ‘stakebuilders’ active (see Times comment below)

So it is interesting to see an announcement on Friday about a PDMR (senior management) individual exercising options and selling all the shares. ‘Normal’ behaviour across most situations where options are exercised, is to sell sufficient to pay all associated taxes (so around 40% of the exercised shares).

Liberty announced that (PDMR) Harold Newton had exercised 22638 shares, and sold the same number, leaving his holding unchanged at 93010 shares. One implication of this might be that Newton didn’t think it imperative to hold on to the 13,000 shares he didn’t need to sell for tax reasons.

From
August 23, 2008

‘Bid prospect puts new life into Liberty International

Market report

Bid speculation became the dominant theme in a rising market yesterday with much attention centred on Liberty International, the group behind shopping centres including Lakeside and Covent Garden.

Liberty rose 70p to 945p after news that Simon Property Group, one of the largest public real estate operators in America, had raised its stake in the company to 3.45 per cent.

Simon has been gradually and quietly building its stake in the British retail-focused real estate investment trust (Reit) for the past few months, taking advantage of its weak share price, dragged down by plummeting property valuations. This month Liberty reported a 7.4 per cent fall in the value of its portfolio and gave warning that the property market was unlikely to pick up in the near future.

It is understood that the two groups have a close relationship, but it is thought unlikely that Simon’s stake-building will lead to a bid. The 8 per cent rise in Liberty’s share price also reflected a degree of short squeezing as those who had been bearish on the company covered their positions.’

Graeme Gordon, non exec Liberty International

Graeme Gordon, son of the founder of Liberty Intl (LII, 958p) Sir Donald Gordon,  and Non Executive Director, has invested £250k in Liberty International shares at 992p.

I looked back at historic trading, and Gordon nailed this one back in May 2006, when he bought 43,000 shares at 1001p. By the end of the year he was up 40% on that trade. His co directors started selling ap at the £14 level in late 2006 early 2007, and have sold down to 1120p in late 2007.

So yes, Gordons trade looks interesting from a timing point of view.

BUT – why bother? He’s already got £15m in Liberty shares in his own name, and must have claims on a significant portion of the ‘Gordon Family Interests’ £730m worth of Liberty Intl shares.

So even though this looks interesting, I’m going to discount the value of this signal due the the tiny increase in share ownership by Gordon. Now if he invested £5m, that would be a different matter…..

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