Interactive Investor

Insider: Three chiefs buying the dip

12th February 2016 14:56

Lee Wild from interactive investor

Tate & Lyle pair's sweet tooth for shares

Sugar giant Tate & Lyle's third-quarter update left a bitter taste in the mouth. Its share price slumped as much as 9% Thursday to five-month lows due to weak non-US dollar currencies like the Brazilian Real and Mexican Peso, and a deteriorating US ethanol market.

As a result, Tate's commodities business, which had been expected to make a profit, will lose money this year and remain under pressure, and analysts have downgraded profit forecasts for the next few years.

Numis Securities analyst Charles Pick has rerun the numbers, and now looks for pre-tax profit of £191 million in the year to March, rising to £202 million in 2017 and £210 million the year after. That's down 3%, 6.5% and 6.3%, respectively, on previous estimates and below consensus forecasts.

"Most analysts were probably considering nudging forecasts higher, given Sterling weakness versus the dollar," said Pick. "Compared to past downgrades, these are minor ones and for factors far more peripheral to Tate & Lyle's core businesses."

Chief executive Javed Ahmed and finance boss Nick Hampton certainly think so. The pair have just paid 545.85p each for a total of 50,000 Tate shares, worth £273,000. Ahmed snapped up 40,000, taking his holding to over 3 million, and Hampton doubled his stake in the business to 20,000.

Sally at Shaftesbury doubles up

The timing was unfortunate as Shaftesbury published its latest trading update just as the wider stockmarket was preparing to leap off another cliff. Shares in the real estate giant fell along with most others, but that's presented an opportunity for canny investors.

Among them is non-executive director Sally Walden. She's just bought 20,000 shares at 845p, doubling her stake.

"The trading update for the period October to 4 February 2016 confirms a buoyant Christmas across the Shaftesbury West End villages which continue to drive almost full occupancy for the units available to let," explains Sue Minden at Panmure Gordon.

Shaftesbury says year-end EPRA vacancy - the rental value of vacant property available expressed as a percentage of estimated rental value - was just 2%.

"The compound annual growth rate (CAGR) in rental income achieved by the group has been 7.5% over 10 years and we continue to expect c9% annual growth in rental income as new schemes add to income and the group's upgrading of the estate leads to continued underlying rental growth," says Munden, who thinks the shares are worth over £11.

Shell NED spies a bargain

A week after Royal Dutch Shell's final results, and just days before the tie-up with BG Group is complete, one non-executive director is in buying mood.

Euleen Goh has just picked up 5,000 Shell shares at 1,464.5p each. Yes, oil prices are unlikely to increase much near-term, but Shell has strong free cash flow and the knockout dividend looks safe for now.

Near a seven-year low, Goh may have got a good deal on a long-term trade.

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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    UK shares
    Commodities
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