The FTSE 100 has been riding high in recent weeks, but that hasn’t stopped directors at Tesco (LSE: TSCO) (NASDAQOTH: TSCDY.US), BAE Systems (LSE: BA) (NASDAQ: BAESY.US) and Vedanta Resources (LSE: VED) 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!
Tesco
The supermarket heavyweight has been struggling to turn around its UK business for the past two years, and a Christmas and New Year trading statement showed its woes continuing.
Following the update, Mark Amour, who was appointed a non-executive director last September, made his maiden purchase of shares. The former financial chief of Reed Elsevier bought 25,000 shares at 326.1p a pop. His £81,525 investment is equivalent to his entire Tesco non-exec fees for the year. Chairman Sir Richard Broadbent chipped in a couple of days later with a 10,000 shares purchase at the slightly higher price of 331.22p a share.
If you fancy Tesco, you can buy in cheaper today: 323p, at the time of writing. You’ll be paying around 11 times prospective earnings, with a potential income of 4.5%.
BAE Systems
The defence group’s shares were hammered last week, when the company said it expects earnings to fall in 2014, in part because of continuing US budget pressures.
New chairman Sir Roger Carr and non-executive director Chris Grigg were quick to take advantage of the price drop. The chairman splashed out £200,000 at 398p a share. Grigg, who is also the chief executive of British Land, invested £100,000 — jointly, with Fiona Grigg — at a bit over 406p a share.
You can still buy at 406p at the time of writing — which is between 10 and 11 times 2014 earnings based on BAE’s guidance. The dividend yield is around 5%.
Vedanta Resources
Over the past three months, the shares of this mining and oil company have been trading at levels not seen since the dark days of 2008/9. Legal wrangles in its Indian heartland and concerns about the corporate structure continue to dog the group.
Nevertheless, executive chairman and majority owner Anil Agarwal has been buying shares with a vengeance since December. During February alone he has purchased 1.38 million shares in six transactions The biggest tranches were at around 800p, but in the most recent — 210,000 shares last week — he was happy to pay 851p.
The shares are trading at 838p at the time of writing, which is an insanely high multiple of current-year expected earnings (the year end is March), but falling to 14 times forecast 2014/15 earnings. The potential dividend income is above 4%.