If you’re looking for investment ideas, it’s often worth looking to see if any company directors are making sizeable investments in their own companies. After all, a director should know a lot more about a company than anyone else – in theory, anyway.
So I thought it would be worth looking at some of the more interesting director deals of the last week.
First up is SDL (LSE: SDL), a provider of “branding and customer-facing solutions” to companies.
The company’s CEO is called Mark Lancaster, and he already has a sizeable stake in the business. But that didn’t stop two members of his family buying shares worth £85,700 in October. As a result of these purchases, Lancaster’s family now holds 1.69% of the company.
The purchases were made just a week after the company made upbeat noises in its latest trading update. Apparently the company is winning new business, especially “at the high end of the market to brands such as UBS and Intel”.
Several brokers reiterated ‘buy’ ratings after the update, including Westhouse Securities, and Cannacord.
SDL, hailed on Forbes earlier this year as one of “ten companies that are disrupting their industries through technology”, began life as a language translation expert. Since then, it has branched out into helping clients deliver a pain-free shopping experience for their customers.
Consumers are becoming more demanding when shopping. Increasingly, they expect companies to offer them a unified brand experience, whether they are buying in-store, online or via phone, and irrespective of language or culture.
This trend would seem to be of greatest importance to those companies with a global footprint. Not surprising then that SDL’s client base includes 42 of the top 50 global brands. The list includes the likes of Bosch, Yamaha, ABN Amro, Siemens and Best Western.
Director sale
It’s always worth looking at director sales as well. A sale may indicate that a director is losing confidence in his own business.
One striking sale is by Edward Spurrier, CEO of communcations group, Alternative Networks (LSE: AN), offloaded £1.5m of his firm’s shares.
In late October, he sold 3.47m of his shares to his and his wife’s company, 7 SFI, which then sold 357,173 of these at 415p per share. The disposal cut his stake in Alternative Networks to 3.11 million shares, or 6.4%.
Alternative provides IT solutions to UK businesses, with its expertise spanning cloud computing, managed hosting, fixed-line voice, software development, mobile, and billing. A recent trading update noted that its mobile division had put in a particularly good performance over the year, with its subscriber base up 12% year-on-year.
The company is trading on a price/earnings ratio of 13, which looks quite attractive at first glance, given that earnings are expected to grow 34% this year. However, earnings only grew by 1% last year.