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Directors off-loading of shares may not be an obvious buy signal for their companies, but their sells don't necessarily mean that the shares in question should be avoided.

Sometimes the sale can be the result of a high demand for certain shares from institutional shareholders. Such a situation occurred earlier in the year at InterLink Foods, where the shares moved up 25 per cent in April despite significant sales from its two leading lights.

Two more examples of selling to satisfy demand occurred in the past month at two of Aim's most established companies – pizza restaurant group Ask Central and health services provider Synergy Healthcare. Both have seen massive selling from top directors, turning paper fortunes into cash ones.

At Ask, the ruling Kaye clan that built the company into a group with 140 restaurants and consistent earnings growth of over 20 per cent, sold 3.5 million shares at 140p, 'to satisfy strong institutional demand' and to pay off personal tax liabilities. The shares in question have already been placed and the price has since fallen to 131p, leaving what looks like an excellent opportunity for private investors. Ask should make nearly £20 million in pre-tax profits this year, putting it on a prospective p/e of 9.6.

At Synergy, ex-chairman Clive Richards offloaded his and his wife's 12.6 per cent stake in order to enjoy retirement in what should be a reasonable degree of comfort (the trade made them £2.3 million). All of the shares (sold at 130p, and now at 158p) were placed with institutional investors.

Sell signs?

But these people weren't the only individuals to pocket more than a million during November. The market was also treated to John Macey, the technical director of telematics market leader Minorplanet Systems reaping a cool £1.1 million from the sale of shares at prices ranging from 102p to 120p. But, again, this doesn't look like a reason to sell (see page 40), as Minorplanet is growing sales and profits strongly, and trades at a forward p/e of 10.

In contrast, we would advise holders of Hornby to take finance director JW Stansfield's decision to sell 85 per cent of his 14,156 shares at 475p as an indication that now is the time to sell up and move on.

SOCO so good

Independent oil companies like Cairn Energy, Paladin Resources and Premier Oil have been attracting increasing attention from the City and financial press of late, after a string of exploration discoveries and corporate moves. Directors have also been active, with those of SOCO International particularly keen. The latest in a string of board buys featured chairman Patrick Maugein, whose trust Chemsa invested a mighty £3 million at £3.15 on 6 November, helping the shares up to £3.65. Board members have been buying progressively all year, but Maugein's purchase was nearly double the amount of all the others put together.

This buy was not the only big purchase in the small cap arena. Seale Moorer, a non-exec at retail software provider NSB Retail Systems, has been gorging on the company's shares, following a lead set by three colleagues, who bought 1.4 million shares between them at 4-5p on 7 November. Moorer instead agreed prices of 4.9p and 6.1p for his purchase of 3.6 million and 2 million shares respectively. They now trade at a mid-price of 6.25p, having slumped from 36.25p this year.

On the subject of possible recovery trails, Aim-bound consumer goods group Jourdan might be worth looking at, despite moving heavily into loss last year. Henderson Global Investors shed its 3.1 million share stake in November, but on the positive side Strand Partners has picked up 350,000 more after executive chairman David Abell stuck his neck out and bought 2.7 million shares, most of them at 8.2p.

Amongst others technology hopeful Corac, football agency First Artist Corporation and Kensington, a mortgages provider, have all seen significant buying. Meanwhile business and software consultancy Triad saw chief executive Mira Maker and chairman John Rigg both pick up 1.25 million shares at 35p.