The FTSE 100 is riding high, but that hasn’t stopped directors at Aviva (LSE: AV) (NYSE: AV.US), Shire (LSE: SHP) (NASDAQOTH: SHPGY.US) and Aggreko (LSE: AGK) buying shares in their own companies.
At what price did these directors nail their colours to the company mast, and how much did they invest? Read on!
Shire
This £16bn pharmaceuticals firm may be a FTSE 100 blue chip, but it’s a growth company with a low yield, and tends to be overshadowed by dividend favourites GlaxoSmithKline and AstraZeneca.
At the start of last week, Shire announced a $4.2bn acquisition of ViroPharma, a rare disease biopharmaceutical company. Shire’s chief executive, Flemming Ornskov, said ViroPharma: “brings us a new growth driving product which augments our already strong growth prospects”.
Ornskov, who became Shire’s chief executive last April, showed just how much the news meant to him, by making a maiden purchase of his company’s shares two days later. Ornskov bought 22,000 shares at 2,819p a time, which amounts to a whopping investment of over £620,000. The shares are a little higher today at 2,846p, but still trade on less than 16 times 2014 forecast earnings, which doesn’t seem excessive for a growth stock.
Aggreko
The world’s leading temporary power generation provider delivered average annual earnings growth of 28% between 2007 and 2012. However, this time last year the company warned: “the economic environment we will be facing in 2013 is particularly uncertain in many of our markets”. Aggreko’s shares are down 27% since then, and analysts expecting to see earnings decline by 10% for the year.
Ian Marchant, the former chief executive of utility group SSE, was appointed as a non-executive director of Aggreko earlier this month; and immediately got his wallet out to buy shares. He invested close to £56,000, giving him 3,500 shares at 1,588p a pop. You can buy at a slightly lower 1,555p today, which is 17 times this year’s earnings expectations; but 18 times next year’s, with analysts forecasting a further 6% earnings decline.
Aviva
Aviva’s recovery from the financial crisis has been slower than some of its rivals. However, after a new chief executive arrived at the start of this year — and the initial blow of a dividend cut — the market has warmed to the insurer’s prospects. Aviva’s shares are up 30% over the past six months or so.
A third-quarter trading update a fortnight ago confirmed progress in line with management expectations, and non-executive director Michael Mire, who joined the company during September, made his first purchase of the company’s shares. Mire bought 7,500 shares at 439.9p for a total outlay of £33,000 — or a third of his annual non-exec pay. Aviva’s shares are currently trading a little lower at 430p, representing 10 times current-year forecast earnings, falling to nine times 2014 forecasts.