Insider: heavy buying of FTSE 100 stock at nine-year low

A nine-year low for Berkeley Group Holdings (The) (LSE:BKG) shares after the housebuilder reset its goals for the next four years has been followed by £325,000 of dealings involving three directors.

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Executive chair Rob Perrins led the way on Wednesday with a £200,000 purchase at 2,878p, alongside investments by chief executive Richard Stearn and finance boss Neil Eady.

The shares closed last week at 3,168p, meaning they have slumped by 28% since setting a one-year high of 4,442p in mid-February.

They tumbled by as much as 18% on Wednesday to 2,796p before closing down by 9% after Berkeley revised its strategy in response to the regulatory and economic environment.

The brownfield redevelopment specialist said it will stop buying land outside of joint ventures because it can no longer make the required rate of return on investment. It said this was due to the continuous increase in the tax and regulatory burden.

The company is also slowing its build rates to match current levels of demand as it looks to support a future operating profit margin within its historic norm between 17.5% and 19.5%.

Analysts at Berenberg said it now assumed a 15% decline in volumes in 2027, followed by a 10% fall in 2028 and no growth in 2029 and 2030.

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Berkeley’s expectation for at least £1.4 billion of pre-tax profit over the next four years averages at £350 million, compared with its previous estimate for a surplus of £450 million in the 2026/27 financial year.

Berenberg cut its pre-tax profit forecasts by 12% on average over 2026-28 but kept its Buy recommendation after lowering its price target from 4,500p to 4,000p.

Recognising the need for a more conservative profit outlook in the current climate, it said the company deserved credit for being proactive in repositioning its strategy to optimise shareholder value.

Berkeley continues to target the return of £2 billion to shareholders by 2035, which is about 65% of its current market capitalisation. It also confirmed it is on track to return £564 million in the period of 2026-30, which is equal to 6% of its market cap per annum.

Given that the share price is well below the April year-end forecast for net asset per share of about 3,900p, Berkeley said returns are likely to be focused on buybacks.

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Berenberg added: “While we understand that the equity thesis now clearly lacks earnings momentum, we would note that it now has four mid-term attractive factors.”

These are an attractive valuation at 0.8 times tangible net asset value, a capital return averaging 6% of its market cap, a strong net cash balance sheet and a “compelling, differentiated business model” that still delivers a 18% margin at its trough.

RBC Capital last week raised its recommendation on Berkeley shares to Outperform, but Goldman Sachs cut its price target to 2,965p from 3,875p previously.

Perrins also bought shares last summer, with an investment worth £100,000 at a price of 3,571p in July and one of £500,000 at 3,846p after the release of annual results in June. He recently relinquished the role of chief executive he had held since 2009.

Boss backs ambitious plan

AG Barr (LSE:BAG) boss Euan Sutherland has made an investment worth £72,000 after he said his firm’s expanded portfolio of drinks brands had started the year with “good momentum”.

His purchase of the FTSE 250-listed shares took place at a price of 662.4p, which is 6% below their level in mid-February. They closed the week even cheaper at 632p.

Sutherland, who was appointed in May 2024 after roles leading Saga, the Co-op and Superdry, said in last week’s annual results that Barr achieved a year of “significant strategic progress”.

This included investment in Innate-Essence and purchase of Frobishers, while the acquisition of Fentimans after the year-end further enhanced exposure to higher-growth categories.

Revenue increased by 4% to £437.3 million in the year to 31 January, boosted by the robust performance of core soft drinks brands Irn-Bru, Rubicon and Boost.

Adjusted profit rose 12.5% to £65.8 million for a third consecutive year of double-digit growth after the operating margin improved by 120 basis points to 14.8%. A dividend of 15.27p a share is due to be paid on 5 June, resulting in an 11% increase for the year to 18.71p a share.

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The support of the acquisitions means Sutherland expects a year of low double-digit percentage revenue growth.

He added: “Our strategy aims to deliver above-market growth rates and realise our ambition of doubling the size of the business. Importantly, we are pursuing this ambition without changing our core business model.”

The company has no direct supply chain exposure to the Middle East and has good hedge cover on all key commodities through most of 2026.

With the group well covered for energy-driven inflationary pressures, Panmure Liberum pointed out that the business offered a defensive, low-volatility 3.5% yield.

At 12.5 times forecast earnings, the broker added that the shares appear undervalued given the potential for steady compounding growth from a robust balance sheet. It has a target price of 750p, which compares with Peel Hunt at 770p.