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Walker's buy doesn't bode well

There was a dearth of transactions to choose from this week but we highlight Barclays and Smiths Group's deals
November 8, 2012, Lee Wild & Robert Ansted

It is perhaps a sign of his confidence that, on the very same day that Sir David Walker formally took over from Marcus Agius as Barclays' chairman, he also decided to spend £115,095 buying 50,000 of the bank's shares. But that confidence could yet prove too bullish.

After all, Barclays' share price has already risen by more than 50 per cent since the latter part of July. And with a sea of challenges still ahead, those gains could easily be lost. To begin with, Barclays (BARC) recently revealed a £47m pre-tax loss for the third quarter of the year - not helped by a chunky £700m of extra provisioning against payment protection claims. And, following on from this summer's Libor-fixing scandal, further reputational woe could be on the horizon.

Barclays is being investigated by the UK’s FSA and Serious Fraud Office, as well as the US Department of Justice, over payments to Qatari investors after it raised funds from the Gulf state. A $470m (£292m) fine from US electricity regulators could also be possible after being accused of manipulating the California energy market. The bank’s significant exposure to such struggling eurozone countries as Spain and Italy is a worry, too. What's more, Barclays’ reliance on weak retail banking markets and volatile investment banking conditions do not bode well for earnings growth.

John Adams

 

Jones pockets more cash

Smiths Group (SMIN) has been a steady performer since September’s encouraging final results. Although much of the restructuring work is done, there are extra savings to come at the detection unit, while new products, especially at the medical division, are driving top line growth. It’s doing more business in fast growing emerging markets, too.

However, head of IT Brian Jones has seen enough. He’s just pocketed more than £100,000 after selling 10,000 shares at 1,069p. It’s not the first time Mr Jones, who worked with chief executive Philip Bowman at both Scottish Power and Allied Domecq, has cashed in. He sold over 1,900 shares at 1,059p in April and another 10,000 at 900p in December last year. More importantly, finance director Peter Turner spent over £94,000 on shares last month.

True, Smiths makes around 20 per cent of its sales from the US public sector, so budget sequestration adds uncertainty. Yet, unemployment there is falling, which usually means increased hospital admissions and, according to broker Nomura, could drive an earnings beat at the medical unit next year. Higher bond yields may also clear the pension fund’s accounting deficit making disposals more likely.

At 1,081p, Smiths shares are up on our buy tip (1,020p, 24 May 2012), and, with impressive margins and respectable earnings growth, we leave our rating unchanged.

Lee Wild

 

Director buys

CompanyDirectorDateNo. of sharesPrice (p)Value (£)
Alkane EnergyRoger McDowell (ch)05 Nov 1250,00024.512,250
Avocet MiningRussell Edey (ch)05 Nov 12100,00063.7563,750
BarclaysSir David Walker (ch)01 Nov 1250,000230.19115,095
China ChainTek UnitedWilliam Knight (ch)30 Oct 123,5002257,875
dotDigitalPeter Simmonds05 Nov 1238,18712.994,960
HydrodecChris Ellis (cfo)30 Oct 12447,84910.7548,144
HydrodecColin Moynihan (ch)02 Nov 12790,00012.598,750
Lok'nStoreRichard Holmes30 Oct 1212,000119.514,340
Low & BonarSteve Good01 Nov 1214,10032.184,537
One Media iPNigel Smethers30 Oct 1258,37121,167
Publishing TechnologyAlan Moug (cfo)31 Oct 1250,1769949,674
Quintain Estates & DevptWilliam Rucker31 Oct 125,60753.53,000
Spectra SystemsDr Nabil Lawandy (ceo)31 Oct 1225,0004010,000
Stanley GibbonJohn Byfield31 Oct 127,05021014,805
Stanley GibbonMartin Braisford31 Oct 1212,500211.928626,491
TelecityMichael Tobin (ceo)05 Nov 122,000843.616,872
TelecityMichael Tobin (ceo)05 Nov 121,000814.58,145
WhitbreadSusan Hooper05 Nov 128002412.919,303
Wolfson MicroelectronisRobert Eckelmann31 Oct 1210,00021121,100

 

Director sells

CompanyDirectorDateNo. of sharesPrice (p)Value (£)
AggrekoBill Caplan30 Oct 121,000212.502,125
Arden PartnersJonathan Keeling05 Nov 1225,0005012,500
Hongkong LandRobert Garman01 Nov 125,000US$6.44US$32,200
M.P. EvansJD Shaw25 Oct 121,2075006,035
M.P. EvansJD Shaw29 Oct 123,79349518,775
M.P. EvansJD Shaw30 Oct 125,00049824,900
Rugby EstatesAndrew Wilson (ceo)05 Nov 124563301,505
Smiths GroupJohn Fawcett Jones05 Nov 1210,0001,069.43106,943

Table compiled by Robert Ansted.

Key to abbreviations: ch = chairman; ce = chief executive; cfo = chief financial officer; fd = finance director; coo = chief operating officer; cs =company secretary; md = managing director