Rathbone rewards its investment managers

Rathbone Brothers itself continues to put up a resilient performance in the face of tough trading conditions, and last year pushed funds under management ahead by 13.4 per cent to just under £18bn, at a time when headline indices performed less well. And crucially, this increase comes both from an improved market performance and also a net inflow of funds.

And chief executive Andy Pomfret looks keen to expand further, confirming that the company is seeking more acquisitions. Only last year it bought the private client business of portfolio management group Taylor Young, which is expected to add £350m to assets under management as clients migrate across, and before that it also bought RM Walkden as well as the investment management business of Allied Irish Bank Jersey. And in anticipation of the changes introduced by the Retail Distribution Review at the start of this year, it also acquired a 19.9 per cent stake in Vision Independent Financial Planning, an independent financial advisory business in the South West. And since then Rathbone has signalled its intentions by raising £25m through a share placing that Mr Pomfret ensures will give the company the necessary firepower to move quickly on further acquisition opportunities.

Jonas Crosland

Directors at AZ buy cheap

AZ Electronic Materials (AZEM) has made a lot of money supplying clever chemicals to electronics manufacturers and built up a following in the City, too. A profit warning earlier this month put a spanner in the works (9 April 2013: 'AZ's punishment looks harsh') and the shares collapsed by more than a third. That looked excessive given the size of AZ's potential and modest earnings multiple.

Most of the company's directors certainly thought so and bought almost £500,000 of shares at between 254p and 271p. Chairman John Whybrow, chief executive Geoff Wild and boss of the microchip division, Rico Wiedenbruch, each spent over £100,000. Early movers - Mr Whybrow and the wife of senior independent director, Andrew Allner - got the best price. In fact, the chairman is already sitting on a £10,000 profit. Those who waited 24 hours, including Mr Wild, paid more. Still, all of them have done well and know the shares are cheap.

Analysts agree and have rushed to upgrade the shares. With new products in the pipeline, market-leading positions in many existing lines, and trading at a significant discount to peers, UBS thinks the shares are worth 340p and Goldman Sachs as much as 400p. The share price of AZ has already bounced back, yet, at 279p, the shares trade on just 12 times earnings estimates for 2014. Rapid progress is unlikely, but if the company can restore margins back to 33 per cent - and it should in time - a multiple nearer 15, in line with peers, will be its reward. Buy.

Lee Wild

Buys

Sells

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