Directors have been splashing the cash at AstraZeneca (LSE: AZN) (NYSE: AZN.US), International Finance (LSE: IPF) and Griffin Mining (LSE: GFM). Should you follow their lead and buy shares in these three companies?
AstraZeneca
Since the release of AstraZeneca’s Q1 results on 24 April, we’ve seen a mammoth buy from the FTSE 100 firm’s finance director, Marc Dunoyer, and a stream of significant purchases by multiple non-executives. The details of the dealings are shown in the table below.
| Director | Date of purchase | No. of shares | Price per share | Total investment |
|---|---|---|---|---|
| Marc Dunoyer | 7 May | 10,000 | 4,397p | £439,700 |
| Ann Cairns | 30 April | 1,100 | 4,455p | £49,005 |
| Shriti Vadera | 29 April | 3,500 | 4,563p | £159,705 |
| Cori Bargmann | 29 April | 700 | $69.21 | $48,447 |
| Graham Chipchase | 28 April | 1,100 | 4,606p | £50,666 |
| Jean-Philippe Courtois | 28 April | 2,500 | 4,536p | £113,400 |
| Bruce Burlington | 27 April | 600 | $71.03 | $42,618 |
Finance director Dunoyer looks to have got a nice price at 4,397p, because the shares are trading at 4,550p, as I write. Nevertheless, 4,555p remains lower than the prices some of the directors were prepared to pay.
The price also remains below the 52-week high of 4,863p reached last year, ahead of AstraZeneca’s board rejecting an indicative offer for the company of 5,500p a share from US giant Pfizer.
AstraZeneca currently trades on 16.4x forward earnings — about in line with the wider market — and offers an above-average yield of 4.1%. The company’s increasingly robust drugs pipeline could begin to drive profits strongly higher in a couple of years, and the current valuation looks reasonably attractive to me.
International Personal Finance
Provident Financial demerged its international home credit operations in 2007 as International Personal Finance. IPF, now a FTSE 250 company in its own right, operates mainly in Central and Eastern Europe, and is growing strongly.
Last week, new chairman Dan O’Connor made a maiden purchase of 41,500 shares at 481.4p a pop for an outlay of just shy of £200,000.
IPF’s shares are trading at 503p, as I write, but remain below their 52-week high of 631p, and are on an undemanding multiple of 13x expected earnings for the current year, falling to 11.5x next year. IPF has pursued a successful strategy of measured and well-researched expansion into new territories, and could complement a UK lender — such as original parent Provident — in a diversified portfolio.
Griffin Mining
Zinc and gold miner Griffin Mining has been operating successfully in China since 1997, and has been listed on the AIM market since then. Griffin’s 2014 performance was hit by a three-month suspension of processing activities to facilitate an upgrade. Nevertheless, the company remained profitable for a 10th consecutive year.
Earlier this month, non-executive director Adam Usdan, who joined Griffin in March last year, made his biggest purchase to date. Usdan splashed out £400,000, buying a million shares at 40p a time. He now has a 17% stake in Griffin, through a personal shareholding and via his hedge fund Trellus.
Of course, small miners in far-flung places are higher-risk investments. However, Griffin’s history in China, a profit-making track record and its growth prospects all suggest that it could be one of the better bets among this class of company. Forward earnings multiples (9x this year’s earnings, falling to 5x next year’s) and a discount to net asset value (last reported NAV/share was $0.83) give a margin of safety and good upside potential.
