Interactive Investor

Insider: ex-easyJet chief builds stake in two big companies

20th September 2022 10:08

by Graeme Evans from interactive investor

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With share prices for both businesses near a one-year low, this experienced executive is snapping up stock. There’s money being pumped into Oxford Nanopore too.

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Major purchases of Dunelm Group (LSE:DNLM) and Segro (LSE:SGRO) shares have been made by Andy Harrison as the former easyJet boss leads from the front at the two companies he chairs.

Harrison, whose CV also includes five years as chief executive of Whitbread, spent £450,000 in a week when both stocks traded at close to their low points for the year.

The £250,000 Dunelm investment was made with Harrison now into his final year as chair, while the £200,000 Segro move was his first since joining the board of the FTSE 100 warehouse and industrial property company in April.

Harrison’s latest Dunelm holding was picked up on Thursday at 748p, which compares with an all-time high for the FTSE 250-listed stock of more than 1,550p in September last year.

Trading conditions have deteriorated significantly since then, but under chief executive Nick Wilkinson the company still managed to post record annual results last week.

Sales rose 41% on their pre-pandemic level at £1.5 billion and profits lifted by almost a third on a year earlier to £209 million. A final dividend of 26p will be paid on 5 December for a total of 40p, an increase of 14.3% that also reflected a robust start to the new financial year.

Wilkinson said: "We feel confident and well prepared to weather the current economic pressures - we emerged from an unprecedented global pandemic as a bigger, better business and we believe we have the tools in place to do that again.

“That said, the operating and economic environment is extremely challenging.”

Shares finished last week at 782.5p, having recovered from their low of 659p at the start of the month. Peel Hunt has a price target of 1,375p and is encouraged by the company’s resilience and record brand awareness at the start of the new financial period.

The broker added: “Coupled with rising market share and the group’s excess cash generation/yield, this is one of the consumer stocks to buy into on trough multiples ahead of the UK’s recovery.”

Harrison’s nine-year tenure on the board ends next September when he will step aside for his successor at Whitbread, Alison Brittain. He made his first purchase of Dunelm shares as a director at 928p in October 2015, with his more recent investments worth £400,000 taking place this spring at prices close to the 1,000p threshold.

His purchase of Segro shares took place on Wednesday at 892p, a few hours before the Real Estate Investment Trust touched its low for the year at just above 860p.

The stock had been above 1,400p at the end of 2021 but its market fortunes have deteriorated  amid cost pressures and fears over slower demand for industrial property.

In late July, Segro said occupier demand for warehouse space was “strong, broad and deep” and continued to be driven by long-term structural tailwinds particularly in urban markets where space is used to provide essential goods and services.

It added that its portfolio had considerable inflation protection, with almost half of rents index-linked and the majority of the rest exposed to UK upwards-only rent reviews.

On Friday, analysts at JP Morgan and Goldman Sachs cut their price targets but continue to see upsides to 1,150p and 1,070p respectively. The stock closed the week at 883.4p.

Significant progress being made at biotech firm

Oxford Nanopore Technologies (LSE:ONT) also got substantial backing from the chair of its board last week, with former Ocado finance director Duncan Tatton-Brown spending £500,000 on shares.

His purchase was made last Tuesday at a price of 295p, shortly after the gene sequencing company had reported robust interim results. The shares topped 700p in December, having made their debut at 425p when last September’s IPO valued the business at £3.3 billion.

Last week’s results showed core revenues from life sciences research tools up by a third, with the company seeing increased demand in areas spanning population genomics, viral surveillance, neurological disorders, cancer and environmental conservation.

Chief executive Gordon Sanghera said the business continued to make “significant progress” as he reaffirmed guidance given at the IPO for a breakeven position by 2026.

RBC Capital Markets had a price target of 400p after the results, with Numis Securities at 500p. The latter said the business has made significant improvements in manufacturing and automation, while also supporting customers at the cutting edge of Covid sequencing.

It added: “Oxford Nanopore’s technology is taking share in the research markets as evidenced by growth in citations that we expect to kick-start future compounding.” Shares closed the week at 289p.

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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