Insider: bargain hunting at three hard-hit shares 

Times are tough for this trio, but directors are confident enough to put big money into their businesses. Here are some of the most interesting insider deals of the past few days.

Workspace Group (LSE:WKP) shares worth £100,000 have been bought by its finance boss, with the FTSE 250-listed provider of flexible London office space trading near its low for the year.

The purchase by Dave Benson, who joined Workspace in April 2020 and previously worked at Whitbread (LSE:WTB) as corporate finance director, took place on Thursday at 508p a share.

The price represents a 51% discount to the net asset value of 988p disclosed in June’s annual results, when the real estate investment trust also reported a 21% increase in both its trading profit to £46.9 million and in its dividend to 21.5p a share.

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Economic conditions have deteriorated since then, but a first quarter update on 21 July showed continued good underlying levels of customer enquiries, viewings and lettings.

The rent roll rose 2.9% on a like-for-like basis to £93.8 million for the three months to the end of June, while the occupancy rate was stable at 89.6%.

Chief executive Graham Clemett added that Workspace’s flexible offer and range of properties had previously been attractive for “agile, innovative SMEs” in more challenging times.

The business lets space to over 3,000 businesses and 30,000 individuals through 58 buildings across London, with the most recent additions to its portfolio being the Old Dairy building in Shoreditch and Busworks in Islington.

It recently acquired commercial property company McKay Securities at a 14% discount to its net asset value, adding a portfolio valued at £495 million at the end of March.

Workspace was founded as London Industrial in 1987, when it acted as a vehicle for the privatisation of the Greater London Council’s industrial property portfolio.

It floated on the London Stock Exchange in 1993 before a £80 million purchase in 1999 expanded the portfolio by 40% and brought many of today’s flagship properties such as the Metal Box Factory in Borough and the Biscuit Factory in Bermondsey.

Shares closed last week at 518p, which is just above the stock’s pandemic low in September 2020 and compares with 964p seen this time last year. Broker Peel Hunt’s most recent note on the company in June showed a price target of 750p.

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The chief executives of AIM-listed Johnson Service Group (LSE:JSG) and Cake Box Holdings (LSE:CBOX) have topped up their holdings in the wake of heavy selling for their shares last week.

Johnson’s Peter Egan, who has led the hotel linen and workwear business since January 2019, made an investment worth £27,000 after seeing shares dive by as much as 10% on Thursday’s warning of short-term margin pressure from higher energy costs.

The stock fell as far as 87.2p even though the company reported further trading momentum and stuck by full-year forecasts - as long as there’s no downturn in discretionary spending or further material deterioration in energy markets.

The interim results revealed a return to profit and a much stronger balance sheet, leading to the reinstatement of the dividend through the payment of 0.8p a share on 4 November and a pledge to launch a buyback programme worth up to £27.5 million.

Egan’s purchase at 90.6p boosted sentiment as shares closed the week at 96.2p, which compares with 158p in February. Peel Hunt has a target price of 124p.

Cake Box shares also staged a fightback after chief executive Sukh Chamdal highlighted his confidence in prospects with a purchase worth £275,000 at a price of 121.85p. The shares had been at 184p prior to Wednesday’s downgrade to profits guidance, which was caused by inflationary pressures and impact of this summer’s heatwave.

Chandal owns about 25% of the egg-free cake business, which trades through around 185 franchisee-run stores and a further 35 kiosks in supermarkets and shopping malls.

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Broker Liberum cut its 2023 earnings forecast by a third after the warning but said the balance sheet was in “rude health” with no debt, adding that on its new forecasts shares trade on a forward earnings multiple of 5.1 times with a 5% dividend yield.

It lowered its price target to 250p, but this compares with 142.5p at the end of last week.

Liberum said: “There is no change to the underlying cash generative growth story underpinned by franchisee demand for new stores and new channels like online and kiosks in supermarkets.”