Share prices may be higher than ever, but top brass at this trio of household names clearly think there's further to go. Our City writer reveals which directors have serious skin in the game.
Shell (LSE:SHEL) chair Sir Andrew Mackenzie and two other FTSE 100 board directors last week spent a combined £300,000 buying shares in support of their respective companies.
The biggest purchase was made by Sir Andrew, whose £200,000 investment was one of his largest since he joined the oil giant’s board in October 2020.
Sage Group (The) (LSE:SGE) non-executive director Roisin Donnelly also picked up £78,000 of shares in the accounting software group and Whitbread (LSE:WTB) board member Fumbi Chima declared an investment worth £30,000 in the Premier Inn chain.
In the week that the FTSE 100 index traded at a record high, all three made their purchases with respective share prices higher than where they started the year.
In the case of Shell, the shares are up 6% so far in 2023 after new chief executive Wael Swan announced a 15% increase in fourth quarter dividend alongside record annual earnings of almost $40 billion (£37.4 billion).
The purchase by former BHP boss Sir Andrew was made on Tuesday at 2,417p, close to the strongest level since summer 2019 and much higher than the 1,936p seen in July.
It is also in sharp contrast to some of his previous purchases, including the £100,000 spent when shares were languishing at 990p a few months after Shell declared its first dividend cut since the Second World War. That investment is now worth around £250,000.
Similarly, a purchase worth £100,000 in February 2021 has risen by about £85,000 based on an original price of 1,345p.
Analysts are predicting further upside for Shell shares, with Bank of America regarding the company as its preferred European Big Oil pick with a target of 3,100p. In particular, the bank notes a strong capex performance and positive outlook for cash returns.
An investor day on 14 June is expected to shed light on future shareholders returns, which were above the targeted range of 20-30% of cash flows in 2022’s results at 35%.
UBS, which has a price estimate of 2,750p, said: “We continue to expect shareholder returns at 35% over the next few years given the strong balance sheet and what we see as a supportive oil and gas macro outlook.”
The latest purchase of Whitbread shares by Fumbi Chima took place on Wednesday at a price of 3,108p, which compares with 2,632p when the chief information officer of the not-for-profit credit union BECU made a previous investment last May.
The leisure chain’s shares recently touched their highest level since February 2022 after a third quarter trading update highlighted strong momentum in the UK with total accommodation sales up 25% in the period.
Liberum lifted its price target to 3,740p following that update, reflecting on Premier Inn’s continued pricing power and the fact that demand continues to be well-balanced between leisure and business as well as London and the regions.
However, shares closed last week at 2,993p after a fall of 94p in a weaker session for the FTSE 100 index on Friday.
The purchase of Sage shares by Roisin Donnelly was made on Wednesday, just five days after the former Procter & Gamble marketing and branding expert took her place on the board. She holds similar roles at NatWest and Premier Foods and is a former director at Just Eat.
Donnelly bought her shares at 782p, which compares with 595p last summer and Friday’s closing level of 750.8p.
Betting on housebuilder's recovery
Robust annual results by FTSE 250-listed housebuilder Crest Nicholson Holdings (LSE:CRST) have been followed up with a £15,000 purchase of shares by a member of its executive leadership team
Group operations director David Marchant, who has over 35 years' construction and housebuilding industry experience, bought the shares on Wednesday at a price of 245.7p.
He made his move a fortnight after the company lifted underlying profits by 29% to meet expectations at £137.8 million, having increased revenues by 16.1% to £913.6 million.
Crest reported signs of resilience at the start of 2023 and said that it remained confident in the long-term fundamentals of the housing market.
The comments were echoed last week at Barratt Developments (LSE:BDEV) and at Marchant’s previous employer Bellway (LSE:BWY), which said its reservation rate “sequentially improved” throughout January as affordability pressures showed signs of easing.
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Crest shares closed last week at 247.2p, but Liberum recently retained its price target of 285p despite making a 27% cut to its profit expectations on the back of lower volumes.
The broker added that chief executive Peter Truscott, who joined at the end of the 2019 financial year, had presided over an impressive turnaround with operating margins up from 12% to 15% and return on capital employed up from 16% to 22%.
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