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Chairman Elect Sir Peter Gershon has invested GBP 133k in Tate and Lyle (TATE, 282p), ahead of his arrival at  Sugar Quay.

Is this purchase a vote for himself, or a money making opportunity?

When in September six of the seven non execs of Tate bought shares (see Tate sweetener, directors see opportunity in weak share price, September 26) , the share price had outperformed the market by around 50% over the following two months.

Having hit the earth with a bang, giving up all its relative gains over a falloff in fizzy drink demand, it seems the newest non exec, Chairman Elect Peter Gershon sees value.

View on Tate and Lyle: Remains positive- high number of non execs buying shares over last 5 months.

Strength of Signal: Remains STRONG

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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.

Tempus on Wednesday declared that ‘Tate and Lyles share price caning is an opportunity to buy back in’, after the share price fell 10% over the judges decision of a patent case on sucralose.

Clearly management at Tate and Lyle (TATE, 384p) agree with Tempus. Six directors bought shares at just over 380p on Wednesday and Thursday this week, investing just under GBP 30k each on avearge, and increasing their holdings by an average of close to 60%.

Directors have been active at prices between 380p and 440p since October last year, taking the total number of directors (exec and non exec) buying shares to seven out of a board of 10, a significant proportion.

I’d love to see a bit more cash committed by directors, but in light of the consistent buying over the year, the % increase in holdings, and the high proportion of the board participating, I believe these share purchases to be a STRONG signal.

Signal strength: STRONG

For details of directors activity see www.digitallook.com, type in TATE, and choose Director Deals tab.

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