Insider: Dialight, Trakm8

Dialight bosses switch on

On Monday we reported it was "Too early to buy Dialight". Well, management weren't listening. On the same day that a miserable set of results sent the LED lighting company crashing to a four-and-a-half year low, top brass have piled in.

The implication here is that the bad news is out of the way, and new chief executive Michael Sutsko is capable of spearheading a recovery. Much, of course, will depend on executing the plan put together following a strategic review currently underway. We'll hear more in the autumn.

You'd expect chairman Bill Ronald to back the man he appointed at the end of May. Ronald spent £23,000 on 5,150 shares at 455p each on Monday, taking his stake to 31,000. Stephen Bird, Dialight's senior independent director and current CEO at wireless communications firm Vitec, picked up 8,000 shares at 410p.

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Investec Securities cut its earnings per shares (EPS) estimates by 41% for 2015, 25% for next and 8% for 2017. But while the broker likes Dialight's rapid revenue growth "its internal systems, controls and processes have been left behind".

It's why the price target is cut from 565p to 460p and the 'hold' rating is repeated.

Trakm8 resumes rally

Three weeks after slightly better-than-expected full-year results, directors at AIM-listed telematics company and Interactive Investor favourite Trakm8 have been selling. But if business is going so well, what's the rush?

Well, Trakm8 shares have, indeed, tripled since November to a record high and are up from just 13p two years ago, but "a new institutional investor" wants a piece of the action and bosses have duly obliged.

Management has placed 1.22 million shares, or about one tenth of their holdings, with the buyer at 157.5p. Executive chairman John Watkins trousered over £1 million from the sale of 650,000 shares. His remaining 5.5 million shares, or 19% of the company, are currently worth nearly £10 million.

Finance director James Hedges (210,000), engineering chief Tim Cowley (190,000), chief technical officer Matt Cowley (100,000) and sales director Paul Wilson (70,000) all profited from the recent rally.

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We covered Trakm8's half-year results in December and suggested that with the share price at 73p, a re-rating was inevitable. We backed them again in April at 119p, but Lorne Daniel at finnCap believes the shares have further to go.

The acquisition of BOX telematics in October 2013 has clearly been a key driver of earnings growth, but organic sales have been impressive, too. "We lifted our FY March 2016 adj. FD [fully diluted] EPS to 11.0p on the improved guidance and raised our target price to 220p, a P/E multiple of 20x, which is comparable with sector peers," wrote Daniel a week after the numbers. That target implies 22% upside from current levels.

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.