Executive decisions

The directors of Gladstone, Sinclair Pharma and Canterbury Foods have

been buying into their companies of late. I urge you to do the same.

In the past I’ve always urged people to take heed when directors sell their shares, as it often indicates that you should get out too. For instance, last July I recommended that investors would be wise to follow the example of Professor J David Rhodes and John Samuels, the chairman and now ex-finance director of electronic product producer Filtronic in offloading their stock, as the share price had dropped from 420 to 302p in the space of four months. If you did get out, you’ll be especially glad considering the shares now trade at a mere 214p.

But equally, I strongly urge investors to keep an eye out for when directors are hoovering up their company’s shares. This, along with optimistic hints about forward trading, should lead to the conclusion that opportunities are being presented that shouldn’t be missed.

Fighting fit

One company that could be going places, if its directors’ actions are anything to go by, is Gladstone, which makes software to enable health clubs manage their membership. At the interim stage to February, the company revealed a pre-tax profit reduced from £231,620 to £130,925 but stated that its order book for the second half was at an all-time high and it was making a move into international markets. Chairman Jeremy Stokes and director Derick Martin demonstrated their confidence in the company by acquiring 250,000 shares apiece, spending £55,000 each at 22p a share. The shares have nudged up slightly to 24p but the potential is obvious.

Banking on success

Earlier in the month, I spied that Andrew Sinclair, the non-executive director and founder of pharmaceutical company Sinclair Pharma, bought 20,000 shares at 120p and a further 10,000 at 122p a few days after the company released its six month results. These appeared negative, as turnover fell £100,000 to £800,000 and operational losses widened to £2.3 million from
£1.3 million.

However, the business, which sources and acquires late stage fully developed pharmaceutical products, has received regulatory approval from the EU and the US Food & Drugs Administration for a number of its products and claims that its order book is several times stronger than at the first half, so substantial growth is expected. Investors picked up on this as the shares have risen to 132.5p, though they still have some way to go to hit the near-160p levels the shares were at one year ago. They’re worth buying.

Pigging out

Meat and pastry products provider Canterbury Foods is midway through a three-year restructuring programme, and prospects must be appetising as non-executive director Kenneth Manley picked up 1.95 million shares at 28p from shareholder Jane Horn, taking his total holding to 5.8 per cent.

The company’s accounts for 2004 look encouraging, as it produced a profit before tax, reorganisation costs and goodwill amortisation of £295,000 after offloading its vegetable and meat trading businesses. The company is switching from red meat to pork and pastry products and is in transition from being a frozen food producer to the food service industry to providing chilled and frozen foods to the food service and retail sectors. I’d advise you to get in now before it really starts bringing home the bacon.