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.
At what price did these directors nail their colours to the company mast, and how much did they invest? Read on!
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%.
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’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.
> G A Chester does not own any shares mentioned in this article.