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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. 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.

I want to revisit Shire (SHP, 911p).

In February David Mott, a non exec with a great pedigree, initiated a position in Shire by investing GBP 150k, saying ‘Shire is one of the most interesting companies in the industry with an impressive recent track record of launches and an equally exciting pipeline’ (see ‘David Mott- puts his money where his mouth is‘).

Last Thursday, Mott committed almost the same amount of cash again, doubling his holding to the equivalent of 30,000 ordinary shares in Shire, by buying 5,000 ADS at $48 (equivalent to buying 15,000 ords at 910p).

I also find other recent purchases:

August 6th Graham Hetherington, CFO, buys 4000 shares at 896p taking him to 56,000 shares.

August 5th Matthew Emmens. Non exec Chairman,  exercises options on almost 40,000 shares at an average price of around 430p. He would normally need to sell roughly 40% of these shares to pay for the tax liable, but is not doing so, so I consider this transaction to be a net investment by Emmens.

August 1st Michael Rosenblatt, Non exec,  bought 1155 shares at 800p

June 13th Aungus Russell, CEO, bought 6000 shares at 804p

If I then look back further to see if directors have historically bought and sold at the ‘right’ times, and I find the following:

I see directors were buyers at 868p to 888p level in September 2006.

Then from November 2006 to September 2007 they were net sellers (exercised options and sold almost all the shares) in range of 1056p to 1270p (shares peaked at 1310p in August 2007)

And now they are buyers again, as from February this year, in range of 804p to 998p (shares troughed at 745p on July 16th).

With the observation of ongoing buying activity in decent $$ amounts, as well as having several directors buying over a short period, I believe the ‘signal’ given by directors dealing activity in Shire Ltd should move from WEAK to STRONG.

David Mott was appointed non exec of Shire plc (SHP 1015p) in October 2007.

He said then “Shire is one of the most interesting companies in the industry with an impressive recent track record of launches and an equally exciting pipeline. I’m very pleased to be joining the Shire team at this point in the Company’s development.”

On Monday, he bought 15,000 shares at 998p, spending £150k. This was his first investment in Shire.

As you’ll see from his bio, Mott is on the Astra Zeneca senior executive management team, having previously been CEO of Medimmune.

One to watch.

For all followthedirectors articles on Shire click here.

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June 2022