Interactive Investor

Insider: Rolls-Royce, Plus500, Amec Foster Wheeler

27th November 2015 14:14

Lee Wild from interactive investor

Rolls-Royce board keep buying

Its problems are well-written, and the turnaround at Rolls-Royce after a slump in the share price to 504p will be long and, most likely, choppy. New boss Warren East will need a top team to make it work, which is why he's just employed former British Aerospace man and GKN chief Sir Kevin Smith as non-executive director.

And Sir Kevin, a partner at a Hong Kong-based private equity firm for the past three years, is backing his boss, spending over £120,000 on 20,000 Rolls shares at 603p.

Director and former Ford number cruncher Lewis Booth is, too. He's just bought the same amount at an equivalent of 613p. Finance boss David Smith, the former bean counter and Rolls' aerospace division, picked up 7,736 shares, at 603p.

But Rolls chiefs don't always call the bottom. Last month, chairman Ian Davis bought 15,000 at 739.5p, David Smith 2,684 at 739.5p, and Booth 10,000 shares at an equivalent of 734p. Ouch!

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Amec Foster Wheeler averages down

Low oil prices have hammered profits at oil services engineer Amec Foster Wheeler. It issued a profits warning three weeks ago and the final dividend is halved. Payouts in 2016 will also be half the figure returned to shareholders in 2014.

In a case of bad timing, Amec paid $3.2 billion (£2.1 billion) for Foster Wheeler last year. Designing and building high-tech oil facilities when oil companies are cutting costs is bad for business.

Industry expert Malcolm Graham-Wood remains wary. "I fear that worse is yet to come and particularly in write-offs and impairment charges," he said recently.

"At the year end there is little doubt in my mind that these numbers could be substantial, the result of buying a company at the top of the cycle."

But chief executive Samir Brikho, who's run the business for over nine years, has just increased his stake by 50,000 close to 1.98 million shares. He paid 458p each this time, costing him over £229,000. The bounce-back hasn't happened yet.

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Plus500 fills bosses' pockets

A day after Plus500 called off the takeover by Playtech, directors picked up shares in the CFD broker following an 8% plunge in its share price to a low of 280p. And their trades are already paying off in a big way.

Non-executive directors Charles Fairbairn and Daniel King spent over £307,000 building stakes in the company. Fairbairn and his wife Susan bought the lion's share - more than 88,000 shares at around 349p - while King opened his account with 13,259 at just over 339p each. The Fairbairns are currently sitting on a paper profit of over £43,000.

It was only six months ago that Plus500 was embroiled in a scandal over poor procedures. It caused customer accounts to be suspended while the company tightened things up. The share price collapsed from almost 800p to less than 200p briefly, before Playtech stepped in with a cheeky 400p per share bid.

Now, even after the Playtech deal collapsed - regulator concerns meant making the 31 December deadline was impossible - Plus500 shares are back at around 400p, give or take.

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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.

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