Interactive Investor

Insider: bosses spend over £1.3m on shares in these three huge fallers

22nd May 2023 09:14

by Graeme Evans from interactive investor

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This trio of FTSE 250 companies have had a very forgettable time, but significant boardroom share buying suggests they may be in bargain territory. Directors are backing a FTSE 100 business to shine too.

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Bosses at fallen FTSE 250 stocks Future (LSE:FUTR), John Wood Group (LSE:WG.) and Genus (LSE:GNS) have wasted no time backing their companies to recover from the share price maulings seen over the last week.

The biggest insider purchase was made by Future chief executive Jon Steinberg, who spent £800,000 with the publisher trading at a level last seen at the start of the pandemic.

Three directors of Wood Group, including the chairman and chief executive, dipped into the market in support of the oilfield services firm’s standalone prospects after takeover talks collapsed with private equity company Apollo.

And the chief financial officer of Genus has been involved in a £50,000 purchase after the animal genetics firm downgraded full-year expectations due to a slower-than-expected recovery in China’s pig market.

In the case of Future and Genus, the investments contributed to an improvement in stock market sentiment as their shares traded higher in the final session of the week.

Future peaked at 930p on Friday before closing at 896p, which compares with 886p when Steinberg made his purchase of 90,000 shares shortly after he warned that full-year profits will be at the bottom end of the City consensus.

Half-year results revealed a 10% underlying fall in revenues to £405 million, partly caused by a drop in online visit numbers affecting the consumer technology segment.

Barclays cut its target price by 270p following the results, but its analysts still see an upside to 1,350p for the Four Four Two and Country Life owner. Peel Hunt adds that the Future model is strong, but warns that unpredictable audience trends mean there is no guarantee that the stock is at the bottom of the downgrade cycle.

The purchase by Steinberg was made a month after he stepped into the role held by Zillah Byng-Thorne, who transformed Future from a £30 million small cap company during a decade in charge. Shares hit 3,940p at the end of 2021 but have been derailed by economic conditions and the flight from growth stocks caused by higher interest rates.

Genus shares have been on a similar downward trajectory as record grain, fuel and fertiliser prices have added to pressure on its customers on top of the ongoing impact of Covid-19.

The company supplies breeding animals, semen and embryos to 50,000 customers in over 80 countries, including the majority of the world’s top 100 pig and dairy farmers.

It said last week that February’s signs of a price recovery in China’s porcine market had faded, meaning producers are not rebuilding their sow herds.

A recovery is expected in the summer, but with the China pig business modestly loss-making, it has lowered full-year expectations. Shares fell as far as 2,378p on Tuesday before people connected to finance boss Alison Henriksen and chair Iain Ferguson bought shares at prices of 2,488p and 2,479p respectively in investments worth a combined £75,000.

The shares closed the week at 2,518p, but Liberum has a price target of 3,950p. The broker called the company a “genuine global market leader with massive barriers to entry”.

Wood Group shares have spent most of this year above 200p after Apollo made four separate approaches culminating in a proposal at 240p worth £1.7 billion. With no offer forthcoming, the board said last Monday that it is well placed to deliver substantial value for shareholders.

Chief executive Ken Gilmartin spent over £400,000, with chair Roy Franklin buying £50,000 at a price of 138p on Thursday. The former FTSE 100 stock closed the week at 139.9p.

A blue-chip winner?

In the FTSE 100 index, two directors of Melrose Industries (LSE:MRO) have spent £160,000 on shares after the GKN Aerospace owner forecast a big jump in profitability by 2025.

The new guidance was published on Wednesday in the wake of the company’s recent demerger of GKN’s automotive and powder metallurgy business.

Chief executive Simon Peckham told investors that the Aerospace business was now well placed to fulfil the potential it had at the time of GKN acquisition five years ago, with a “highly enviable” aftermarket presence and predictable strong cash flows.

He added: “This is a great business in a very attractive global aerospace sector.”

His forecast for the business, which employs 15,000 people at 38 sites in 12 countries, showed operating profits doubling to £700 million by 2025 on revenues of £4 billion.

The investments worth £96,000 by Melrose senior independent director David Lis and £66,000 by non-executive director Charlotte Twyning took place on Thursday at prices between 470p and 491p. The stock closed the week at 484.1p.

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