Over the past month, it has been very interesting to notice which UK shares have been bought by those inside the company. Directors often receive a bonus at the end of the year, so have funds to use in January and February. Further, some receive stock as part of their compensation package. All of this information is very useful to me to see the sentiment of company directors and how they act.
Better results, better to buy
Last week, a non-executive director of British American Tobacco bought 3,300 shares, totalling £100,815. Karen Guerra snapped these up only a few days after the business announced strong full-year results for 2022.
Given the disclosures required for purchasing stock around results being released, I imagine this was a buy order that was approved well in advance of the results coming out. However, this gives me even more confidence if she was happy to purchase even before she knew the extent of good results.
Revenue jumped 7.7% versus the previous year, with continued growth in the New Category range. This division focuses on alternatives to traditional tobacco products such as vaping. This bodes well for the future.
A chunky investment
Another FTSE 100 titan was in the news yesterday. Segro Chairman Andy Harrison bought 115,379 shares in the business, totalling a chunky £993,539.14.
He only took on his role back in June last year. So I would expect a good portion of this purchase was as part of his first end-of-year compensation package. It does give me confidence in the business though. The fact that the Chairman has a decent stake means that he has a large incentive to ensure long-term share price performance. If the stock does well from here, not only will he gain but shareholders will too.
Given that the property stock has dropped by 32% over the last year, it’s also a statement to the market that insiders still believe in the future of the company.
Jumping on the bandwagon
Finally, I noticed that at the end of last month, non-executive director Debra Lee purchased 505 shares in Burberry. Even though this totalled a relatively modest £11,988.70, it’s interesting she bought some shares because they’re currently at record high levels.
The risk is that the stock is overvalued, and buying at the top could mean losing money if the share price falls. However, if an insider is still happy to buy the stock now, it tells me that she believes the company can still grow in the future and therefore the share price has room to appreciate further.
For example, the price-to-earnings ratio is 27.49. Even though this is above the FTSE 100 average of 11.45, it isn’t as high as fashion retailer Next (30.82) or JD Sports (39.22). I appreciate these aren’t perfect comparisons, but they’re the closest competitors within the index.
I don’t have the cash to buy all three stocks right now. But when I do have money, I think Segro would be my favoured buy.
