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A summary of my thoughts from last week (click on stock name to get the article/post) :

Axis Shield (ASD) – Signal strength MEDIUM –  Positive- Ex Chairman of Axis (before merger with Shield) Erik Hornnaess, is seen to be payer pretty high levels for shares in his alma mater Axis Shield. The stock is up 40% relative to the market so far this year. This is postive for two reasons: a) as a non exec he knows what’s going on within the group. b) as an ex chairman he knows this business inside out. Also- if you look back you’ll see he is supported by consistent buying from directors earlier in the year.

Reckitt Benckiser (RB.)- no signal- interesting activity nonetheless, with EVP de Groot buying aggressively, and CEO Bart Becht selling shares he exercised earlier.

RBS (RBS)- Weak signal – Negative – The whole board of RBS subscribed for shares at 200p in the June offering. Now we see two directors selling. Either they need the cash, or they think there is downside risk in the shares. Or both.

Rathbones (RAT)- Medium signal- Negative – Two directors of Rathbone have taken advantage of a 50% jump in the share price to top slice their positions in the group. It is interesting to see the same thing happening at another private client broker/adviser Hargreaves Lansdown, where three directors are selling.

Tate and Lyle (TATE) – Strong signal- Positive- Six directors bought shares last week after the shares fell 10% on a court ruling. Since October last year seven directors out of a board of 10 have been buying shares, a significant proportion.

ITV (ITV) – Weak signal- Positive- CFO, Director of Television, and Deputy Chairman have all bought shares in the last week at around 1/3rd of last years share price. We may start to see more news on costcutting at the group, although I need to see more directors share buying before being convinced. In the meantime ITV goes on the watchlist. 

AIG (AIG) – no signal- my thoughts on Hank Greenberg reportedly selling shares in AIG whilst lending his support to the ‘rescue’.

Disclosure: I have a position in Axis Shield.

I wondered why Rob de Groot, EVP at Reckitt Benckiser (RB., 2724p) had been buying so aggressively (GBP 3m+ in last two weeks) whereas Bart Becht has been selling.

If you look through the Annual Report, you’ll see that it is group policy for senior management to hold shares, thereby aligning themselves with shareholders. EVPs have to own 200,000 shares before they get any options or performance awards. 200,000 shares is a lot of $$, over GBP 5m at current prices. De Groot was appointed to EVP position in July 2008.

Just imagine how the attitude to risk would have changed if you had had to do that at Lehman, Bear or Merrill !!

Bart Becht has been selling down his exercised options. He exercised 600,000 options in June, and has sold 200,000 shares since. I’m sure he has more to go.

Neither of these sets of transactions can be used as signal on which to predict future share price performance.

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