Directors have been buying big-time at Banco Santander (LSE: BNC), Talktalk Telecom (LSE: TALK) and Purplebricks (LSE: PURP) after recent results.
Should you follow their lead, and load up on shares of these three companies?
A banker buy?
The market was unimpressed by Santander’s annual results, published last week. One-off Q4 charges of €1.44bn (with compensation for mis-sold PPI in Britain accounting for almost half the hit) and tough economic conditions in Brazil both took the shine of a decent underlying trading performance overall and improving capital ratios.
Executive chairman Ana Botín waded into the market the day after the results, accumulating 200,000 shares in several tranches. She splashed out a total of €794,345 (£606,000), buying at an average price of €3.97 (303p) a share.
Chief executive José Álvarez followed suit yesterday, purchasing 134,952 shares at €3.71 (282p) a pop, for a total outlay of €500,352 (£380,500).
You can pick Santander’s shares up cheaper today — 265p as I write — and they look good value on a price-to-earnings (P/E) ratio of just 8, with a 5.5% dividend yield.
All talk?
TalkTalk Telecom’s shares have fallen relentlessly since last October’s cyber attack, but have rallied modestly following a Q3 trading update yesterday. Management said business is now “returning to normal” and “we remain very confident in the long term outlook for the group”.
Some analysts reckon it’ll be a stretch for TalkTalk to deliver on its bullish earnings guidance and generous dividend commitment. However, it’s not all talk from the board. Yesterday, managing director Charles Bligh backed the company to the tune of almost £1.5m, buying 617,978 shares at 240.92p a time.
The share price is just a couple of pence higher, as I write. A P/E of 12.6 based on projected earnings for the year to March 2017 and dividend guidance that produces a yield of “no lower than” 7.1% suggest Talktalk is a good-value buy, so long as management confidence proves justified.
Purple patch?
Disruptive hybrid estate agency Purplebricks joined the stock market as recently as 17 December. Top fund manager Neil Woodford participated in the 100p a share IPO, and bought more shares a few days later, taking his stake in the company to over 29%.
Purplebricks’ shares fell as low as 73p during January’s market turmoil, but half-year results released early last week were a catalyst for a rally. Chief executive Michael Bruce and chairman Paul Pindar got in early on the day of the results, buying 320,000 shares and 300,000 shares, respectively. Mr Bruce paid 78p a share and Mr Pindar 78.16p. So, getting on for a quarter-of-a-million quid invested by each.
The shares have continued to head north. Now changing hands at 95p, the price is markedly higher than the directors paid, although still below the 100p a share Neil Woodford forked out in the IPO. Purplebricks is currently loss-making, as it invests in scale and marketing, so is hard to value. Buying at this stage is really a matter of trust in the company’s experienced management team and in the judgement of its major shareholder.