Cruise ship company Carnival (CCL) has suffered a string of bad luck in recent years, what with vessels sinking, losing power in pirate-infested seas and, more recently, catching fire. Add to that the global economic slowdown, which has caused consumers to rein in their spending, combined with higher fuel prices, and you can see why demand has fallen and costs have risen for the world's largest cruise operator.
Yet the shares are still highly rated, trading on an eye-watering 25 times 2013 earnings estimates, according to Bloomberg's consensus figures. We believe that rating is way above the high-waterline, as spelled out in our recent sell tip (2,289p, 4 July 2013), and that Carnival's shareholders would be wise to jump ship. Lower ticket prices are hurting revenue growth, although it should be pointed out that operating costs did weaken at the half-year stage, pushing profit up 74 per cent. Still, costs are kept relatively buoyed by things such as vessel repairs and higher insurance. Fuel prices, meanwhile, are still at historically high levels.
Perhaps that's something Carnival's Pier Luigi Foschi had in the back of his mind when he decided to offload just over a quarter of his stake in the company. On 26 July, he sold 40,000 shares at 2,520p each, giving him a windfall of just over £1m and leaving him with 114,793 shares in the company. True, the shares aren't anywhere near record highs, but they have risen 16 per cent in the past year and are up 8 per cent year-to-date. Admittedly, they're up 11 per cent on our sell tip, but we still believe our reasons for selling the shares hold up. Sell at 2,559p.
Providence directors shift positions
The past few weeks have been very busy for Providence Resources (PVR), both in terms of the company's exploration efforts offshore Ireland and director dealings.
On 22 July, Providence announced that its sole high-impact exploration well this year, Dunquin, operated by ExxonMobil, failed to find commercial quantities of oil. Providence’s share price started tumbling and within a week several directors made public shows of faith in the company by exercising options to buy shares. Chairman Brian Hillery was the first, acquiring 102,694 shares by exercising options at an undisclosed price.
Director John O’Sullivan and company secretary Michael Graham followed shortly thereafter, exercising options to buy 20,538 and 10,269 shares, respectively, bringing their holdings to a paltry 30,648 and 15,519 shares. Both men announced that they "do not intend to sell shares at present". In any event, the company will be in a closed period for share dealings from 30 July.
But Mr Hillery decided to hedge his bet on 29 July and sell 70,170 shares at an average price of 388p, yielding gross proceeds of £272,000. The company stated “the entire proceeds of the sale are being used by Dr Hillery to fund the previously announced exercise of options and associated costs and expenses".
We advised readers to sell their shares in Providence following the negative well result, because there are now very few exploration catalysts expected over the next year and there is significant downside risk from the Barryroe farm-out process. At 395p, we remain sellers.
BUYS
| Company | Director | Date | No of shares | Price (p) | Value (£) | Holding (shares) | Holding (percentage) |
|---|---|---|---|---|---|---|---|
| Alcentra European Floating Rate Inc | Ian Fitzgerald (ch) | 29 Jul 13 | 15,000 | 106.95 | 16,043 | 15,000 | 0.01 |
| Alliance Trust | Karin Forseke (ch) | 29 Jul 13 | 26,395 | 443.25 | 116,996 | 84,181 | 0.01 |
| Arden Partners | Jonathan Keeling (dch) | 25 Jul 13 | 334,334 | 40 | 133,734 | 2,509,334 | 11.25 |
| Ariana Resources | Michael de Villiers (ch) | 30 Jul 13 | 1,000,000 | 0.925 | 9,250 | 7,735,502 | 1.39 |
| Bellway | Denise N Jagger | 31 Jul 13 | 500 | 1,395 | 6,975 | 1,000 | 0.00 |
| Bellway | Paul Hampden Smith | 30 Jul 13 | 3,620 | 1,381 | 49,992 | 4,620 | 0.00 |
| British Sky Broadcasting | Nicholas Ferguson (ch) | 26 Jul 13 | 594 | 829 | 4,924 | 22,722 | 0.00 |
| British Sky Broadcasting | Daniel Rimer | 26 Jul 13 | 378 | 829 | 3,134 | 21,500 | 0.00 |
| Bullabulling Gold Ltd | Peter Mansell (ch) | 30 Jul 13 | 500,000 | 2.48 | 12,386 | 1,625,000 | 0.54 |
| C&C | Sir Brian Stewart (ch) | 26 Jul 13 | 100,000 | 427 | 427,000 | 200,000 | 0.06 |
| Elementis | Anne P Hyland | 30 Jul 13 | 10,000 | 254.8 | 25,480 | 10,000 | 0.00 |
| Grainger | Baroness Ford of Cunninghame | 31 Jul 13 | 12,000 | 171.6 | 20,592 | 40,076 | 0.01 |
| Informa | Derek Mapp (ch) | 30 Jul 13 | 80,700 | 524.07 | 422,924 | 180,700 | 0.03 |
| Marechale Capital | Patrick Booth-Clibborn (ce) | 26 Jul 13 | 413,800 | 1.039 | 4,299 | 5,659,969 | 9.81 |
| Pacific Alliance Asia Opportunity Fund | Christopher Gradel | 26 Jul 13 | 51,624 | 132.5 | 68,402 | 7,663,063 | 5.96 |
| Severn Trent | Gordon Fryett | 30 Jul 13 | 1,000 | 1,762 | 17,620 | 2,178 | 0.00 |
| Tate & Lyle | Anne Minto | 31 Jul 13 | 3,600 | 834.25 | 30,033 | 8,600 | 0.00 |
| Telecity | Michael Tobin (ce) | 30 Jul 13 | 2,000 | 922.84 | 18,457 | 668,000 | 0.33 |
| VinaLand Ltd | Michel Casselman* | 26 Jul 13 | 272,420 | 45 | 122,589 | 913,920 | 0.19 |
| Wolfson Microelectronics | Glenn Collinson | 31 Jul 13 | 33,300 | 153.56 | 51,135 | 181,150 | 0.16 |
| Wolseley | Pilar Lopez | 25 Jul 13 | 1,000 | 3,168 | 31,680 | 1,000 | 0.00 |
*Purchased by spouse | |||||||
SELLS
| Company | Director | Date | No of shares | Price (p) | Value (£) | Holding (shares) | Holding (percentage) |
|---|---|---|---|---|---|---|---|
| BT | Tony Chanmugam (fd) | 29 Jul 13 | 65,130 | 336 | 218,837 | 844,772 | 0.01 |
| BT | Ian Livingston (ce) | 29 Jul 13 | 537,846 | 336 | 1,807,163 | 3,395,476 | 0.04 |
| Carnival | Pier Luigi Foschi | 26 Jul 13 | 40,000 | 2,520 | 1,008,000 | 114,793 | 0.05 |
| Datatec Ltd | R P Evans (cfo) | 30 Jul 13 | 11,500 | 370.83 | 42,645 | 24,252 | 0.01 |
| Great Portland Estates | Toby Courtauld (ce) † | 25 Jul 13 | 293,323 | 564.59 | 1,656,072 | 1,179,212 | 0.34 |
| Great Portland Estates | Neil Thompson † | 25 Jul 13 | 202,399 | 564.59 | 1,142,725 | 640,567 | 0.19 |
| Informa | Derek Mapp (ch) | 30 Jul 13 | 80,700 | 524 | 422,868 | 100,000 | 0.02 |
| Providence Resources | Dr Brian Hillery (ch) | 29 Jul 13 | 70,170 | 388 | 272,260 | 46,584 | 0.07 |
| † In order to meet the tax/NI liability of Performance and Matching awards | |||||||
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
