The Insider: City deals uncovered

Believe in your (Jelf)

Insurance broker Jelf Group has had a storming 2014. Its share price is up 63% and both sales and profits are up sharply. A new incentive scheme will reward management if the company is taken over, too. But founder and deputy chairman Chris Jelf is still buying shares, and the market has taken this as a sign to follow suit.

Jelf, who already owns nearly 3% of the company, has snapped up another 22,800 for his SIPP at 129.6p each, and his wife Julie has deposited 33,500 in her SIPP at the same price. Mr Jelf is now interested in over 2.5 million Jelf shares. Since then, and despite a choppy stockmarket, Jelf shares have risen to 142p.

Of course, insurance premiums are under pressure and the company will likely depend on acquisitions to drive earnings growth over the next 12 months. It was unsurprising, then, that these share deals came just a day after Jelf bought Beaumonts Insurance Group for £10.1 million, plus another £8.28 million if the company does well.

The acquisition is expected to increase earnings per share for the year to September 2015 by 6% to 10.1p, and by 15% in 2016, the first full year, to 11.3p. That puts the shares on a forward price/earnings ratio of 14, dropping to 12.6 for 2016.

STM man buys from selling shareholder

STM Group dishes out financial advice to the well-heeled, cross-border investors and expats, mainly tips on tax, legal, trust and pensions. For six years, the shares have never traded above their AIM float price of 50p, stuck largely between 15p and 35p.

It's hardly set the market alight, and International Financial Options, a personal investment vehicle of Nigel Green, remains a seller. Green, founder and chief executive of global IFA group deVere, once owned about a quarter of STM, partly to fund the company's products which would help deVere clients transferring pensions to Malta.

But Green has been winding down his stake to focus on deVere, and he's just sold 1.1 million shares at 18.5p apiece, reducing his holding to 7.9%. Thankfully, there is a willing buyer in STM's director of business and product development Alan Kentish. He now owns 11.17% of the company, worth £1.25 million.

"STM is at a very exciting stage in its development of specialist products and services and broadening of its distribution capability so Alan Kentish's appetite for buying further shares in the Group is very encouraging," said STM boss Colin Porter.

House broker finnCap thinks so, too. "After a period of group repositioning, profit from STM’s pension administration business is poised to grow," it says. "Current year forecasts appear intact and, looking beyond 2014, rising revenue from pension scheme annual management charges should drive profit and potentially fund an attractive dividend stream. A current EV/EBITDA multiple of 4x therefore appears too cautious."

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. 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.