Directors at Aviva plc (LON:AV), SABMiller plc (LON:SAB) and Cairn Energy PLC (LON:CNE) have been buying shares in today's high-flying market.
The FTSE 100 index is up 8% since the start of the year and up 24% (over 1,000 points) on its 52-week low.
Nevertheless, directors at Aviva (LSE: AV) (NYSE: AV.US), SABMiller (LSE: SAB) and Cairn Energy (LSE: CNE) have been buying shares in their own companies in today's high-flying market.
Blue-chip insurer Aviva reported below-expectations results on 7 March. What's more, the company slashed its final dividend by 44% and warned investors to expect a cut of the same order for the next interim payout.
The shares dived 13% on the day. Cue heavy director buying, summarised in the table below.
|Date of buy||Director||Price per share paid||Cost of buy|
|12 March||Mark Wilson||321p||£481,667|
|8 March||Sir Adrian Montague||320p||£49,720|
|8 March||Gay Huey Evans||330p||£16,520|
|7 March||Michael Hawker||316p||£15,810|
New chief executive Mark Wilson's spend of almost half a million quid was his maiden purchase of Aviva shares. The other three buys, totalling over £80,000, were made by non-execs.
At the time of writing, you can buy Aviva's shares at a lower price than any of the directors paid. The shares are trading at 311p, or around seven times forecast earnings for the current year. The cut to the final dividend and the board's guidance for the next interim give a yield of 4.7%.
In contrast to Aviva, where directors bought after the shares crashed, SABMiller's shares have been on an upward trajectory, rising almost 50% in 10 months.
Mark Amour, a non-executive director of the FTSE 100 drinks giant, recently splashed out £104,115 on 3,000 shares at £34.71 a pop. Mr Amour paid around 20 times forecast earnings for the year to March 2014 and gets a measly 2% dividend yield.
You can buy SABMiller's shares a little cheaper today -- £34.29 at the time of writing -- but the high earnings multiple and low yield are barely changed since Mr Amour's purchase on12 March.
The shares of Cairn Energy, the FTSE 250 oil and gas explorer, are pretty volatile, having been as high as 350p and as low as 250p over the past 12 months.
On 20 March, three directors -- chief executive Simon Thomson, his deputy Mike Watts, and managing director Jann Brown -- all bought shares at 283.5p Their total spend was £125,000.
Cairn had net cash and a near-cash investment amounting to £1.8bn at its last balance sheet date of 31 December 2012. The company's current market capitalisation is £1.7bn at 279p a share. Again, as with Aviva and SABMiller, you can buy these shares at a slightly lower price than the directors paid.
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> G A Chester does not own shares in any of the companies mentioned in this article.