Director's Dealings

Reading the runes of the market is notoriously difficult. There are a whole host of well-paid analysts and economists out there who frequently get it wrong, squabble about future directions or, especially in more recent times, simply follow a gathering consensus of opinion. In many cases company directors are no different, but at least investors can see when they are putting their money where their mouths are.

For investors who like to follow the example of those at the coalface of the entrepreneurial economy, the indicators are positive, with notable director buying activity in cyclical sectors like media, household goods and software.

Turning the corner?

The household goods and textiles sector has been in the doldrums for the past few years. But this year it has picked up a head of steam, probably due to value hunting as much as anything else. A number of directors have been jumping on the bandwagon, notably at specialist work-wear manufacturer Alexandra, where five added to their holdings following the release of final results showing pre-tax profits down from £5.1 million to £2 million. Finance director Richard Michell was the most active, picking up 84,750 shares, most of them at 62p. This compares with a recent share price of 68p.

Footwear manufacturer Lambert Howarth's new chairman, Fred Vinton, also stuck his neck out by purchasing 50,000 shares in the company at 155p apiece. Those shares are now up at 171p, having slumped below £1 last summer.

Swimming pool-to-property concern Hawtin saw a trust controlled by chairman Len Dovey sell 2 million shares at 14.5p for a property transaction – at a substantial premium to the 11p open market price.

Sector prospects remain relatively subdued, but investors seem to be warming to the low p/e ratios and decent dividend yields on offer. Alexandra, for instance, offers a 7 per cent yield on a prospective p/e of eight.

Media and software hardening?

Buying is continuing in the software sector, with most shares still languishing well off their 52-week highs. Although reported results continue to cause sharp intakes of breath, future prospects seem to be improving for many of those companies that are still with us.

Intelligent Environments saw losses spiral to £7 million last year. But it has since attracted new funding from some well-regarded institutions. More recently, chairman Clive Richards backed up some positive noises with a 500,000-share purchase at 4.25p.

Fellow Aim firms Focus Solutions and Bond International Software have both been doing relatively well in tough markets.

Focus' management recently made some upbeat announcements about prospects and three directors subsequently bought a raft of shares. Over at Bond, one director has added to his stake. The shares of each remain near their 52-week lows.

On techMARK, MMT Computing and StatPro both attracted director buys following share price recoveries. However, both have since declined – an unusual occurrence.

At Retail Decisions, Geoff Westmore and Nick Caunter followed last month's assured developments with buys worth a total of £13,000.

Among media stocks, small cap director buying has been evident at digital content provider Stream, where financial director Paul Tuson spent £18,000 at 14.5p. At Motion Media, three directors spent £20,000 at 28p, while Digital Classics' beleaguered shares failed to respond to a couple of small trades. Electric Word meanwhile saw chairman Nigel Wray and executive director Sylvester Stein spend £20,000 to up their stakes to a combined 25 per cent of the share capital.

Best of the rest, plus sales

In the resources arena, oil exploration and production firms SOCO International and Cairn Energy, plus Aim-listed platinum group metals hopeful Cluff Mining, have all attracted management purchases. This is despite their shares being at or around recent highs.

In construction, Heywood Williams (the subject of a recent 'Buy' recommendation from Teather & Greenwood) and Kingspan attracted director attention. But house-builder Wilson Connolly's deputy chairman, Lynn Wilson, sold 1 million shares for £1.8 million, as did his brother.

Another big sale passed through on behalf of TTP Communications executive director Mark Collins. He got rid of 1 million shares, now priced at 86.5p. Meanwhile, medical products business Huntleigh Technology's Ian Standing and his wife sold a total of 11,252 shares at 445p.

The last word goes to recently installed Oystertec chairman Angus Munro, who added another 500,000 shares to his 2.5 million holding at 25p.