Insider: share buying at AIM star trading near a record high

12th April 2021 17:01

Graeme Evans from interactive investor

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It’s been a favourite among investors for many years, and the chairman is clearly confident still.

Long-serving CVS Group (LSE:CVSG) chairman Richard Connell has bought £90,000 worth of shares in a purchase showing his commitment to the vets business following a big protest vote by shareholders.

Connell has been in the role since CVS floated on AIM in 2007 when it had a portfolio of 100 veterinary surgeries and a valuation of just over £100 million, overseeing its transformation into a business with almost 500 sites and a stock market valuation of £1.3 billion today.

But as his period of service as non-executive chairman exceeds the maximum nine years recommended in the Corporate Code, almost 25% of shareholder votes were cast against his re-election to the board at the company's AGM in November.

CVS says Connell continues to be independent and that his skills, knowledge and experience are valuable, particularly following a period of significant change to the board.

His latest purchase of shares was made at a price of 1,808p, which is close to the record high of above 2,000p seen last month after half-year results highlighted further impetus from the pet ownership boom during Covid-19 lockdowns.

Brokers N+1 Singer and Peel Hunt are supportive of a valuation above 2,000p and said the company looked well positioned to drive further shareholder value.

Peel Hunt increased its earnings per share forecasts for this year and next by 14% and 9% respectively, adding that it expects the company to step up the pace of acquisitions as well as maintain the current level of top-line growth.

The broker added: “We continue to see veterinary businesses and CVS as well placed to benefit from the increase in demand for pet ownership combined with greater propensity to care for pets.”

CVS's like-for-like sales growth rose to about 10% in January and February, compared with 7.8% in the first half of the year, as veterinary practices moved from emergency-care only to being Covid-19 secure.

New client registrations rose by 17% in the first half and CVS is well-placed for the long-term as the current lockdown generation of cats and dogs will require more vet visits as they get older.

The opportunity has not gone unnoticed by AIM investors, making CVS one of the past year's best performing stocks after rising 140% since the start of the first lockdown to leave the stock among the 20 biggest on the junior market.

Connell is also sitting on a tidy paper profit of £134,000 after buying £100,000 worth of shares at 770p and 785p on separate occasions at the end of March last year.

The chartered accountant now has a 0.22% stake in the company worth £2.8 million. His executive team is led by Richard Fairman, who spent six years at RAC Group before taking on the CEO's role at CVS in August 2018.

CVS was established in 1999 and now employs 7,400 people, including 1,900 veterinary surgeons and 2,500 nurses across a  network of 497 practices in the UK, Ireland and Netherlands. There are also seven pet crematoria, three laboratories and an online pharmacy.

Non-executive director Richard Gray also bought CVS shares worth £56,000 on 29 March.

More buying at Purplebricks

A resurgent property market has provided the backdrop for the latest big purchase of Purplebricks (LSE:PURP) shares by its senior non-executive director Simon Downing.

The £250,000 acquisition by Downing was made with the AIM-traded shares at 97p, having been as low as 32.5p in the early days of the pandemic. Since then, a package of measures, including a new mortgage guarantee scheme in this year's Budget to help buyers with a 5% deposit, have fuelled activity levels in the property market.

This was highlighted on Friday when lender Halifax said the average house price had risen by 6.5% annually in March to reach a record of £254,606.

The most recent trading figures from Purplebricks came in December, when it said its number of instructions rose by 20% in the five months since the property market's May reopening. It reported a 4.8% share of properties sold by volume amid signs that consumers are now more comfortable about using apps and tech-based alternatives.

Downing, who joined the board in April 2018, is already sitting on a £210,000 paper profit from a previous purchase after buying Purplebricks shares in August when the price was 57p.

He is the founder and executive chairman of Civica Group, the software business he led through its flotation on AIM in 2004 before it was sold to Partners Group for £1.06 billion in 2017 when it had over 4,000 employees and operations in nine countries.

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.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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