The IC's own Mark Robinson recently argued that the chances of a successful investment in a company depended greatly on how much its directors stood to lose if things went wrong (Skin in the Game, Investors Chronicle 23 Aug- 29 Aug 2013). If ownership is a measure of confidence, then Farouq and Haroon Sheikh, the founders of social care company CareTech (CTH), have backed themselves to deliver the growth that has eluded the sector over the past two years.
The two directors bought nearly 365,000 shares each at 190p for a combined cost of £1.38m to add to their total 50 per cent stake in the company. It is true that Caretech is carrying sizeable debts, but the company's wholly-owned asset base marks it out in a sector that has suffered from the worst excesses of sale & leaseback leveraged finance. The shares have been on an upward curve this year, but still offer value. Based on analysts full-year EPS estimates of around 28p for the year to September 2013, up from 16.7p last year, the shares still only trade on seven times earnings estimates. The 3.3 per cent dividend yield is attractive too. In this case it's worth following the owners' lead. Buy.
Julian Hofmann
Low & Bonar directors back placing
Specialist materials group Low & Bonar (LWB) has successfully completed the acquisition of Texiplast, a Slovakian producer of high strength geosynthetic products, for a net cash payment of €18.9m (£16m). And to help pay for the purchase a total of 29.6m shares - or just under 10 per cent of the issued share capital - have been placed with Numis Securities at 69p a share, raising around £19.8m net of expenses.
Low & Bonar's directors have been busy taking part in the placing, led by chief executive Steve Good who bought 91,817 shares to take his total holding to 1.01m shares. Non-executive chairman Martin Flower bought 43,770 shares and now holds 481,912 shares, while finance director Mike Holt topped up his stake to 366,535 shares with the purchase of 33,291 shares. Non-executive directors John Sheldrick and Trudy Schoolenberg - appointed non-executive director in May - both made purchases at 69p a share.
Texiplast specialises in soil reinforcement, separation, filtration and erosion control products and in 2012 generated cash profits of €3.1m on turnover of €12.7m. Low & Bonar operates in a specialist market with significant barriers to entry. At 71p, the shares are up 13 per cent from our buy tip price (63p, 4 July 2013), yet still trade on an undemanding 10 times forecast earnings, and with signs of an economic upturn, we're still buyers.
Jonas Crosland
BUYS:
| Company | Director | Date | No of shares | Price (p) | Value (£) | Holding (shares) | Holding (%) |
|---|---|---|---|---|---|---|---|
| AGA Rangemaster | Paul Jackson | 02 Sep 13 | 4,968 | 114.5 | 5,688 | 7,000 | 0.01 |
| Baobab Resources | Jeremy Dowler (ch) | 30 Aug 13 | 75,000 | 13.38 | 10,031 | 8,740,169 | 2.90 |
| Brady | Pat Brazel | 09 Sep 13 | 100,000 | 62.55 | 62,550 | 381,682 | 0.47 |
| British Assets Trust * | Lynn Ruddick (ch) | 04 Sep 13 | 27,000 | 135.5 | 36,585 | 62,409 | 0.02 |
| Burberry | Matthew Key | 03 Sep 13 | 1,260 | 1,568.66 | 19,765 | 1,260 | 0.00 |
| Caffyns | Simon Caffyn (ce) | 04 Sep 13 | 2,000 | 415 | 8,300 | 46,366 | 1.67 |
| CareTech Holdings | Farouq Sheikh (ch) | 02 Sep 13 | 364,828 | 190 | 693,173 | 13,502,328 | 25.97 |
| CareTech Holdings | Haroon Sheikh (ce) | 02 Sep 13 | 364,828 | 190 | 693,173 | 13,502,328 | 25.97 |
| Cayenne Trust (The) | Richard Atkinson | 02 Sep 13 | 11,000 | 131.5 | 14,465 | 28,316 | 0.08 |
| Chamberlin | David Roberts (fd) | 06 Sep 13 | 5,000 | 110 | 5,500 | 5,000 | 0.06 |
| Coal of Africa | David Brown (ch) | 30 Aug 13 | 120,000 | 7.86 | 9,432 | 150,000 | 0.01 |
| Coal of Africa | Michael Meeser (cfo) | 30 Aug 13 | 200,000 | 7.8 | 15,600 | 200,000 | 0.02 |
| Conygar Investment Company (The) | Robert Ware (ce) | 04 Sep 13 | 50,000 | 129 | 64,500 | 3,550,000 | 4.00 |
| Dechra Pharmaceuticals | Ishbel J S Macpherson | 03 Sep 13 | 2,861 | 693.5 | 19,841 | 5,848 | 0.01 |
| Dechra Pharmaceuticals | Julian Heslop | 03 Sep 13 | 5,000 | 693.5 | 34,675 | 10,000 | 0.01 |
| Diamondcorp | Nick Allen | 02 Sep 13 | 85,000 | 5.7 | 4,845 | 207,366 | 0.07 |
| Dignity | Martin Pexton | 02 Sep 13 | 3,000 | 1,477 | 44,310 | 3,000 | 0.01 |
| Dignity | Jane Ashcroft | 30 Aug 13 | 1,000 | 1,475 | 14,750 | 1,000 | 0.00 |
| Essentra | Lorraine Trainer | 05 Sep 13 | 7,500 | 797 | 59,775 | 7,500 | <0.01 |
| Fuller Smith & Turner * | John Dunsmore | 03 Sep 13 | 10,470 | 940 | 98,418 | 23,305 | 0.07 |
| Gaming Realms | Michael Buckley (ch) | 29 Aug 13 | 18,651 | 21.87 | 4,079 | 16,300,000 | 11.14 |
| Gasol | Alan Buxton | 05 Sep 13 | 275,000 | 18 | 49,500 | 700,000 | 2.10 |
| Goals Soccer Centres | Philip Burks | 05 Sep 13 | 30,000 | 155.8 | 46,740 | 163,478 | 0.30 |
| Hydrodec | Lord Moynihan (ch) | 06 Sep 13 | 455,000 | 8.75 | 39,813 | 3,455,326 | 0.80 |
| Intu Properties | John Whittaker | 29 Aug 13 | 50,000 | 307.8 | 153,900 | 192,102,358 | 19.87 |
| JPMorgan Brazil Investment Trust | Mark Bridgeman | 03 Sep 13 | 9,611 | 69 | 6,632 | 21,007 | 0.04 |
| JPMorgan Indian Inv Trust * | Hugh Sandeman | 30 Aug 13 | 9,000 | 297.29 | 26,756 | 19,000 | 0.02 |
| LMS Capital | Nicholas Friedlos | 03 Sep 13 | 50,000 | 78 | 39,000 | 92,404 | 0.05 |
| LondonMetric Property | James Dean | 05 Sep 13 | 20,000 | 106.6 | 21,320 | 20,000 | <0.01 |
| Low & Bonar | Steve Good * | 06 Sep 13 | 91,817 | 69 | 63,354 | 1,010,915 | 0.31 |
| Low & Bonar | Martin Flower * | 06 Sep 13 | 43,770 | 69 | 30,201 | 481,912 | 0.15 |
| Low & Bonar | Micke Holt * | 06 Sep 13 | 33,291 | 69 | 22,971 | 366,535 | 0.11 |
| Low & Bonar | John Sheldrick * | 06 Sep 13 | 6,993 | 69 | 4,825 | 76,993 | 0.02 |
| Low & Bonar | Trudy Schoolenberg * | 06 Sep 13 | 36,231 | 69 | 24,999 | 36,231 | 0.01 |
| National Grid * | Jonathan Dawson | 03 Sep 13 | 12,000 | 752 | 90,240 | 24,000 | 0.00 |
| office2office | Hugh Cawley (fd) | 30 Aug 13 | 30,000 | 34 | 10,200 | 50,000 | 0.14 |
| office2office | David Callear (ch) | 30 Aug 13 | 200,000 | 34 | 68,000 | 650,991 | 1.79 |
| office2office | Simon Moate (ce) | 30 Aug 13 | 30,000 | 34 | 10,200 | 236,832 | 0.65 |
| PuriCore | Daniel Heggin | 05 Sep 13 | 50,000 | 40 | 20,000 | 3,359,091 | na |
| PuriCore | Daniel Heggin | 06 Sep 13 | 550,000 | 43 | 236,500 | 3,909,091 | 7.80 |
| Renold | Robert Purcell (ce) | 29 Aug 13 | 500,000 | 28 | 140,000 | 3,748,526 | 1.68 |
| Serco | Andrew Jenner (fd) | 30 Aug 13 | 9,030 | 549.49 | 49,619 | 447,477 | 0.09 |
| Serco | Alastair Lyons (ch) | 30 Aug 13 | 18,600 | 534.8 | 99,473 | 33,600 | 0.01 |
| Serco | Christopher Hyman (ce) | 30 Aug 13 | 18,400 | 539.5 | 99,268 | 935,424 | 0.19 |
| Shaftesbury | Christopher Ward (fd) | 04 Sep 13 | 3,448 | 580 | 19,998 | 5,448 | 0.00 |
| Sierra Rutile | Jan Castro (ch) | 04 Sep 13 | 30,000 | 54 | 16,200 | 1,684,750 | 0.33 |
| Sierra Rutile | Jan Castro (ch) | 29 Aug 13 | 125,000 | 54 | 67,500 | 1,654,750 | 0.32 |
| STV | Baroness Ford (ch) | 02 Sep 13 | 11,338 | 219 | 24,830 | 15,788 | 0.04 |
| Synety | Simon Cleaver (ch) | 06 Sep 13 | 35,000 | 150.41 | 52,644 | 237,606 | 3.75 |
| Thomas Cook | Michael Healy | 05 Sep 13 | 18,248 | 137 | 25,000 | 24,001 | <0.01 |
| Xplorer | John Davies | 05 Sep 13 | 13,000 | 22.1 | 2,873 | 13,000 | 0.12 |
SELLS:
| Company | Director | Date | No of shares | Price (p) | Value (£) | Holding (shares) | Holding (%) |
|---|---|---|---|---|---|---|---|
| Bankers Petroleum Ltd | Robert Cross (ch) | 04 Sep 13 | 750,000 | 223.70 | 1,677,725 | 1,256,466 | 0.50 |
| Belvoir Lettings | Dorian Gonslaves (ce) | 06 Sep 13 | 200,000 | 184 | 368,000 | 453,595 | 2.12 |
| Belvoir Lettings | Carl Chadwick (fd) | 06 Sep 13 | 150,000 | 184 | 276,000 | 340,196 | 1.65 |
| Blinkx | Dr Michael Lynch | 03 Sep 13 | 3,000,000 | 150.15 | 4,504,617 | 17,902,712 | 4.87 |
| Delcam | Ed Lambourne | 05 Sep 13 | 575,000 | 1,650 | 9,487,500 | 287,389 | 3.62 |
| Fidessa | Ron Mackintosh | 04 Sep 13 | 2,000 | 2,108.43 | 42,169 | 1,000 | 0.00 |
| Frenkel Topping ** | Richard Fraser | 05 Sep 13 | 1,100,000 | 26 | 286,000 | 3,306,880 | 5.23 |
| LMS Capital | Barnard Duroc-Danner | 03 Sep 13 | 76,272 | 78 | 59,492 | 146,126 | 0.08 |
| LMS Capital | Barnard Duroc-Danner | 04 Sep 13 | 48,469 | 77.2 | 37,418 | 97,657 | 0.05 |
| LMS Capital | Barnard Duroc-Danner | 05 Sep 13 | 28,062 | 77.1 | 21,636 | 69,595 | 0.04 |
| Michelmersh Brick Holdings | Alan Hardy | 02 Sep 13 | 900,000 | 39 | 351,000 | 5,659,391 | 9.72 |
| PayPoint | Stephen Rowley | 04 Sep 13 | 16,116 | 1,085.6 | 174,955 | 5,000 | 0.01 |
| Pearson † | Will Ethridge | 30 Aug 13 | 50,000 | 1,269.23 | 634,617 | 435,768 | 0.05 |
| Pennon | Susan Davy | 06 Sep 13 | 4,200 | 723.5 | 30,387 | na | <0.05 |
| Pennon | Stephen Bird | 05 Sep 13 | 3,450 | 714.88 | 24,663 | na | <0.05 |
| Randall & Quilter Inv Holdings | Paul McNamara | 29 Aug 13 | 5,000 | 140 | 7,000 | 124,106 | 0.17 |
| Randall & Quilter Inv Holdings | Paul McNamara | 30 Aug 13 | 15,000 | 138 | 20,700 | 109,106 | 0.15 |
| Staffline | Andy Hoggarth (ce) | 05 Sep 13 | 600,000 | 540 | 3,240,000 | na | 5.80 |
* Connected person/spouse ** SIPP † ADRs
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
