An eye on dealings

Services like Directus and Directorwatch supply subscribers with daily, weekly or monthly details of directors' share dealings. Your broker is also able to give you the same information on a daily basis for any shares in which you have an interest. I agree that directors' dealings can often be a helpful guide to the future prospects of a company, but there are a few important caveats.

First, let us look at the law on the subject. No one in possession of unpublished and price-sensitive information can deal in a share. Knowledge of an impending takeover bid would obviously therefore prohibit dealing. There are also closed periods two months before both the interim and final results and purchases and sales must be announced within five days of dealing.

I am never unduly influenced by odd-lot small sales or purchases. To be impressed, I have to feel that the shares that were sold or purchased are of some significance to the director in question.

The founder or large shareholder placing, say, 200,000 shares out of a total of 5 million would not concern me at all - he has to live. If, however, he sold half his shareholding, that would unnerve me. The financial director selling 10,000 shares out of a total of 15,000 would also be an obvious cause for concern. In contrast, several executive directors buying a total of some pounds 200,000 worth of shares might be a possible cause for celebration.

Browsing over my April return of directors' dealings, I noticed that the chairman of Admiral sold more than 1 million shares, leaving him with a holding of 2 million, and the managing director sold 100,625, to leave a total of 420,000. The company's future outlook might be fine, but sales of pounds 4.6m worth of shares are enough to put me off. In contrast, two directors of Takare sold 200,000 shares each, but still own a total of more than 22 million. The proceeds are being used for tax liabilities and they have no intention of selling any more. No cause for alarm.

I noticed that David Montgomery, of Mirror Group Newspapers, made a well-judged purchase of 50,000 shares at 108p soon after the results were announced. This was obviously an encouraging sign of confidence, but the shares are already 143p so the gilt may now be off the gingerbread.

I was going to look closer at the fundamentals of Erskine House when I saw, in early April, that five directors bought a total of 220,000 shares for prices ranging from 30.5p to 37p. However, I was pre-empted when Alco Standard made an unexpected bid of 90p in May.

Two transactions that also caught my eye this month were the purchase of 100,000 shares each by Jack Wilson, the chief executive, and Statis Papoutes, the managing director, of London Forfaiting. This increased their total shareholdings to just under 12 million shares between them. The near pounds 400,000 value of the two transactions was enough to make me take a closer look. London Forfaiting is a provider of export finance in three big trading blocks: Europe, the Americas and the Far East. There is not much space left for the fundamentals, so here they are in rapid fire - present price 200p, market capitalisation just over pounds 200m, 1992 eps 13.75p. The Estimate Directory brokers' consensus forecast for 1993 eps is 15.2p, but a very recent circular by Smith New Court forecasts 16.4p. Smith also forecasts growth of 17 per cent for 1994 to give eps of 19.2p. On its forecast, the prospective p/e ratio for 1993 is only 12.2.

However, there may be growing problems with export finance in recession-hit markets like Europe, which leaves me with more doubts than the directors.

The author is an active investor who may hold any shares he recommends in this column. Shares can go down as well as up. He has agreed not to deal in a share within six weeks before and after any mention in this column.

PROMOTED VIDEO
Extras
indybest
Travel
Flocking round: Beyoncé, Madame Tussauds' latest waxwork, looking fierce in the park
travelIn a digital age when we have more access than ever to the stars, why are waxworks still pulling in crowds?
Arts and Entertainment
tv
Arts and Entertainment
Judi Dench appeared at the Hay Festival to perform excerpts from Shakespearean plays
tvJudi Dench and Hugh Bonneville join Benedict Cumberbatch in BBC Shakespeare adaptations
Sport
Is this how Mario Balotelli will cruise into Liverpool?
football
News
Ronahi Serhat, a PKK fighter, in the Qandil Mountains in Iraqi Kurdistan
i100
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
Arts and Entertainment
Poet’s corner: Philip Larkin at the venetian window of his home in 1958
booksOr caring, playful man who lived for others? A new book has the answer
Arts and Entertainment
Exhibition at the Centre Pompidou in Metz - 23 May 2012
art
News
Matthew McConaughey and his son Levi at the game between the Boston Red Sox and the Houston Astros at Fenway Park on August 17, 2014 in Boston, Massachusetts.
advertisingOscar-winner’s Lincoln deal is latest in a lucrative ad production line
Life and Style
Pick of the bunch: Sudi Pigott puts together roasted tomatoes with peppers, aubergines and Labneh cheese for a tomato-inspired vegetarian main dish
food + drink
Arts and Entertainment
Alfred Molina, left, and John Lithgow in a scene from 'Love Is Strange'
film
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Junior Quant Analyst - C++, Boost, Data Mining

£25000 - £35000 per annum: Harrington Starr: Junior Quant Analyst - C++, Boost...

Service Desk Analyst- (Desktop Support, Help desk)

£25000 - £35000 per annum: Harrington Starr: Service Desk Analyst- (Desktop Su...

Junior Quant Analyst (Machine Learning, SQL, Brokerage)

£30000 - £50000 per annum: Harrington Starr: Junior Quant Analyst (Machine Lea...

UNIX Application Support Analyst- Support, UNIX, London

£45000 - £55000 per annum: Harrington Starr: UNIX Application Support Analyst-...

Day In a Page

Air strikes? Talk of God? Obama is following the jihadists’ script

Air strikes? Talk of God? Obama is following the jihadists’ script

The President came the nearest he has come yet to rivalling George W Bush’s gormless reaction to 9/11 , says Robert Fisk
Ebola outbreak: Billy Graham’s son declares righteous war on the virus

Billy Graham’s son declares righteous war on Ebola

A Christian charity’s efforts to save missionaries trapped in Africa by the crisis have been justifiably praised. But doubts remain about its evangelical motives
Jeremy Clarkson 'does not see a problem' with his racist language on Top Gear, says BBC

Not even Jeremy Clarkson is bigger than the BBC, says TV boss

Corporation’s head of television confirms ‘Top Gear’ host was warned about racist language
Nick Clegg the movie: Channel 4 to air Coalition drama showing Lib Dem leader's rise

Nick Clegg the movie

Channel 4 to air Coalition drama showing Lib Dem leader's rise
Philip Larkin: Misogynist, racist, miserable? Or caring, playful man who lived for others?

Philip Larkin: What will survive of him?

Larkin's reputation has taken a knocking. But a new book by James Booth argues that the poet was affectionate, witty, entertaining and kind, as hitherto unseen letters, sketches and 'selfies' reveal
Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?

Waxing lyrical

Madame Tussauds has shown off its Beyoncé waxwork in Regent's Park - but why is the tourist attraction still pulling in the crowds?
Texas forensic astronomer finally pinpoints the exact birth of impressionism

Revealed (to the minute)

The precise time when impressionism was born
From slow-roasted to sugar-cured: how to make the most of the British tomato season

Make the most of British tomatoes

The British crop is at its tastiest and most abundant. Sudi Pigott shares her favourite recipes
10 best men's skincare products

Face it: 10 best men's skincare products

Oscar Quine cleanses, tones and moisturises to find skin-savers blokes will be proud to display on the bathroom shelf
Malky Mackay allegations: Malky Mackay, Iain Moody and another grim day for English football

Mackay, Moody and another grim day for English football

The latest shocking claims do nothing to dispel the image that some in the game on these shores exist in a time warp, laments Sam Wallace
La Liga analysis: Will Barcelona's hopes go out of the window?

Will Barcelona's hopes go out of the window?

Pete Jenson starts his preview of the Spanish season, which begins on Saturday, by explaining how Fifa’s transfer ban will affect the Catalans
Middle East crisis: We know all too much about the cruelty of Isis – but all too little about who they are

We know all too much about the cruelty of Isis – but all too little about who they are

Now Obama has seen the next US reporter to be threatened with beheading, will he blink, asks Robert Fisk
Neanderthals lived alongside humans for centuries, latest study shows

Final resting place of our Neanderthal neighbours revealed

Bones dated to 40,000 years ago show species may have died out in Belgium species co-existed
Scottish independence: The new Scots who hold fate of the UK in their hands

The new Scots who hold fate of the UK in their hands

Scotland’s immigrants are as passionate about the future of their adopted nation as anyone else
Britain's ugliest buildings: Which monstrosities should be nominated for the Dead Prize?

Blight club: Britain's ugliest buildings

Following the architect Cameron Sinclair's introduction of the Dead Prize, an award for ugly buildings, John Rentoul reflects on some of the biggest blots on the UK landscape