MENU

Directors Have Been Splashing The Cash At Aviva plc, Shire PLC and Aggreko plc

The FTSE 100 is riding high, but that hasn’t stopped directors at Aviva (LSE: AV) (NYSE: AV.US), Shire (LSE: SHP) (NASDAQOTH: SHPGY.US) and Aggreko (LSE: AGK) buying shares in their own companies.

At what price did these directors nail their colours to the company mast, and how much did they invest? Read on!

Shire

This £16bn pharmaceuticals firm may be a FTSE 100 blue chip, but it’s a growth company with a low yield, and tends to be overshadowed by dividend favourites GlaxoSmithKline and AstraZeneca.

At the start of last week, Shire announced a $4.2bn acquisition of ViroPharma, a rare disease biopharmaceutical company. Shire’s chief executive, Flemming Ornskov, said ViroPharma: “brings us a new growth driving product which augments our already strong growth prospects”.

Ornskov, who became Shire’s chief executive last April, showed just how much the news meant to him, by making a maiden purchase of his company’s shares two days later. Ornskov bought 22,000 shares at 2,819p a time, which amounts to a whopping investment of over £620,000. The shares are a little higher today at 2,846p, but still trade on less than 16 times 2014 forecast earnings, which doesn’t seem excessive for a growth stock.

Aggreko

The world’s leading temporary power generation provider delivered average annual earnings growth of 28% between 2007 and 2012. However, this time last year the company warned: “the economic environment we will be facing in 2013 is particularly uncertain in many of our markets”. Aggreko’s shares are down 27% since then, and analysts expecting to see earnings decline by 10% for the year.

Ian Marchant, the former chief executive of utility group SSE, was appointed as a non-executive director of Aggreko earlier this month; and immediately got his wallet out to buy shares. He invested close to £56,000, giving him 3,500 shares at 1,588p a pop. You can buy at a slightly lower 1,555p today, which is 17 times this year’s earnings expectations; but 18 times next year’s, with analysts forecasting a further 6% earnings decline.

Aviva

Aviva’s recovery from the financial crisis has been slower than some of its rivals. However, after a new chief executive arrived at the start of this year — and the initial blow of a dividend cut — the market has warmed to the insurer’s prospects. Aviva’s shares are up 30% over the past six months or so.

A third-quarter trading update a fortnight ago confirmed progress in line with management expectations, and non-executive director Michael Mire, who joined the company during September, made his first purchase of the company’s shares. Mire bought 7,500 shares at 439.9p for a total outlay of £33,000 — or a third of his annual non-exec pay. Aviva’s shares are currently trading a little lower at 430p, representing 10 times current-year forecast earnings, falling to nine times 2014 forecasts.

Of course, insurers aren't the only financial-sector play on a recovering economy. Banks, in particular, have seen some spectacular gains.

If you're thinking about buying banks yourself, or already own shares, you may be interested in reading the Motley Fool's brand new "Essential Guide to Investing in Banks".

In this exclusive FREE report, our senior investment analyst cuts through the fog of banking numbers to explain in plain language six key ratios you should be looking at, why they're important, and how each of the UK's big five banks measures up.

The report comes with no obligation and can be in your inbox immediately -- simply click here.

> G A Chester does not own any shares mentioned in this article. The Motley Fool owns shares in Aggreko and has recommended GlaxoSmithKline.