Insider: boardroom buyer backs this FTSE 100 top pick

A loss of momentum for RELX (LSE:REL) shares has served up a buying opportunity for one of its directors after he spent £52,000 increasing his stake in the top 10 FTSE 100 company.

Non-executive Alistair Cox made his move after the analytics and decision tools business told its AGM that it expects another year of strong growth in revenue and operating profit.

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Shares closed the session 1% lower and have fallen 4% in the past month, although they are still 7% higher this year as RELX looks to continue its run as one of the best returning FTSE 100 stocks of the past 40 years.

Bank of America said it regarded the share price moderation as an enhanced opportunity ahead of a potential generative AI boost for the company’s LexisNexis legal division in 2024.

It backed the shares with a target price of 4,100p, which compares with Friday’s close of 3,329p and Cox’s purchase price of 3,228p. The former Hays chief executive previously bought £25,000 of shares in August at a much cheaper 2,604p.

The group’s success has been built on its two biggest divisions of Risk and the Elsevier journals operation Science, Technical and Medical, which each account for about a third of revenues.

The Legal arm generated about a fifth of sales in 2023 and continued to grow in the first quarter on growing demand from lawyers for AI-based technology tools.

RELX employs some 11,000 technologists and spends about £1.3 billion a year on IT. It  has been using extractive artificial intelligence for more than a decade to help customers make better decisions, get better results and be more productive.

The company’s fourth and final division is Exhibitions, which contributed 12% of last year’s revenues through events including the London MCM ComicCon. It is benefiting from an increase in face-to-face activity alongside stronger usage of value-enhancing digital tools.

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Bank of America left its growth forecasts unchanged following last week’s AGM update, which it said was in line with guidance given at February’s annual results. The results for 2023 showed revenues up 8% to £9.2 billion and operating profits 13% higher at £3 billion.

It said: “We remain upbeat on the scope for Legal division acceleration, and note recent supportive industry data points in Risk and in Exhibitions.”

The bank said that RELX has a valuation of 18 times 2024 earnings, representing a 20% discount to US peers.

UBS is also a supporter after naming RELX a top pick for 2024, noting that the company is one of the few stocks in Europe that offers structural growth, high liquidity, a healthy balance sheet, and short-term earnings upside potential.

This year’s 40th anniversary for the FTSE 100 index has shone a light on the compounding growth qualities of RELX as one of the London market’s understated performers.

It ranks alongside British American Tobacco (LSE:BATS) and Rio Tinto Registered Shares (LSE:RIO) as the best of the 1984 FTSE 100 originals, when RELX was trade magazine publisher Reed International. A 1993 merger with a Dutch scientific publisher created Reed Elsevier before a change of name in 2015.

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The company is the biggest holding of the Finsbury Growth & Income Ord (LSE:FGT) trust, having delivered a total return of 11.3 times since 2000 compared with 5.4 times for the Nasdaq. Its manager Nick Train said recently: “Even now, some of our clients are surprised to see how well RELX has done, even compared with the ‘home’ of technology, the Nasdaq.”

Harbour Energy (LSE:HBR) shares have received £250,000 of boardroom support ahead of this year’s transformational deal to buy Wintershall Dea’s upstream assets.

Chief executive Linda Z Cook made her purchase on Thursday at a price of 285.5p, which compares with 225p before the 21 December announcement of the $11.2 billion acquisition of the gas-weighted portfolios in Norway and Argentina and growth projects in Mexico.

Shares closed last week at 293.4p, but broker notes published by Jefferies and Berenberg following March annual results suggest the potential to trade back at 2022 levels nearer 355p.

Subject to shareholder and regulatory approvals, the Wintershall deal is expected to complete in the fourth quarter of the year and will transform the London-listed company, which last year delivered about 15% of UK and gas production.

This is Harbour’s fourth major acquisition, having bought a package of UK North Sea assets from Shell for $3 billion in 2017 and ConocoPhillips UK North Sea for $2.7 billion two years later.

Cook called the Wintershall purchase “the most transformational step yet” in the company’s bid to create a large-scale, geographically diverse independent oil and gas company.

The move comes as the 2022 introduction and subsequent extension of the government’s Energy Profits Levy causes Harbour to review its activity levels in the UK.