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Big Director Buying At Diageo plc, SABMiller plc And Tullow Oil plc

diageo

The FTSE 100 is riding high, but that hasn’t stopped directors at Diageo (LSE: DGE) (NYSE: DEO.US), SABMiller (LSE: SAB) (NASDAQOTH: SBMRY.US) and Tullow Oil (LSE: TLW) buying shares in their own companies.

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

Diageo

Diageo, the world’s number one spirits company, reported a worse than expected slowdown in sales growth within its half-year results announced on 30 January. The maker of Johnnie Walker, Smirnoff and Guinness saw its shares dive 5% to a 52-week low.

Group chief executive Ivan Menezes, and a couple of senior managers, were quick to take advantage. Menezes invested a whopping $1 million in Diageo’s American Depository shares, the equivalent of 34,000 ordinary shares at around £18 a time; and chief marketing officer Syl Saller dipped into her purse to the tune of $120,000. Global supply and procurement boss David Gosnell got an even better price a few days later, buying 16,864 shares at £17.68 a pop for an outlay of close to £300,000.

You’ll have to pay a bit more — £18.60 a share at the time of writing — if you fancy joining management in backing Diageo’s long-term prospects. And I do mean long term, because the valuation is a fairly rich 18 times forecast earnings, with a modest potential income of 2.7%.

SABMiller

Brewer SABMiller’s shares were weak in the wake of a trading update on 21 January, and declined further with the read-across from Diageo 10 days later. Directors at the maker of Peroni, Grolsch and Miller Lite, joined their fellows at Diageo in loading up with shares.

Veteran non-executive director Miles Morland was the first to splash the cash, coughing up £273,000 to buy 10,000 shares at £27.29 a time. Deputy Chairman Guy Elliott, who joined the board last July, followed with a 2,000 shares purchase at £27.90, for an outlay of over £55,000.

As with Diageo, you’ll have to pay something of a higher price than the directors — £28.80 at the time of writing — if you want to back SABMiller’s long-term prospects. The valuation is also similar to Diageo’s, being 18 times forecast earnings, with a potential income of 2.5%.

Tullow Oil

Tullow Oil’s shares are currently trading at multi-year lows. The £7bn international oil exploration, development and production group, has seen some drilling disappointments of late, and under-whelmed the market with profits in its annual results, announced on 12 February.

Chairman Simon Thompson immediately forked out almost £50,000 to buy 6,244 shares at £7.96 a share. He was quickly followed by non-executive director Jeremy Wilson (who joined the board last October) with a maiden purchase of 15,000 shares at £7.87 a pop, giving a total investment of £118,000.

At the time of writing, you can buy shares at £7.60. The earnings rating is sky high and the dividend a pittance, but Tullow’s assets are the attraction. Bid speculation is ever present, and the latest from the rumour mill is that Norway’s Statoil or Chinese oil companies could be interested at £14 a share. Management says the company’s not for sale — but the owners (shareholders) might beg to differ at the right price.

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> G A Chester does not own any shares mentioned in this article.