Insider: bosses go bargain hunting at three mid-cap shares

Plunging share prices can offer a chance to snap up cheap stock. Have these directors timed their purchases right?

Three FTSE 250-listed stocks have received backing worth £195,000 after share dealings by directors at Moneysupermarket.com Group (LSE:MONY), Aston Martin Lagonda Global Holdings Ordinary Shares (LSE:AML) and Genuit Group (LSE:GEN).

The investments took place on Thursday following bouts of heavy stock market selling.

The shows of support went some way to shoring up confidence, with all three stocks ending the week higher than the level the directors made their insider purchases.

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Moneysupermarket.com was backed by chairman Robin Freestone, who spent £40,000, as well as by chief executive Peter Duffy after his purchase worth £20,000.

The pair did so at around 176p, having seen shares slide as much as 15% in one session last month when it emerged that Amazon is launching a comparison service for insurance.

The prospect of increased competition in one of the company’s key markets offset progress in a third-quarter update, when strong trading for Moneysupermarket’s money and travel verticals resulted in a performance ahead of expectations.

The Amazon-led sell-off left shares on 12.8 times forecast 2022 earnings, which Liberum said looked attractive as it swung to a “buy” recommendation and 215p target.

The broker noted a previous unsuccessful attempt by Google to enter the price comparison market and said it was not a given that Amazon will take market share. Liberum said: “We agree competition risk has increased, but we would argue competition was already high.”

Analysts at UBS also remain supportive despite the uncertain revenues outlook. They have a price target of 250p and said the re-opening of the energy switching market could be a key catalyst for the stock in 2023. The shares ended the week at 180.1p.

Gains for Genuit?

At Genuit, the £100,000 purchase by chairman Kevin Boyd was made after a recent trading update left shares at their lowest since the former Polypipe business listed in 2014.

Genuit, which supplies water, climate and ventilation products, lowered the City’s earnings expectations after reporting that its usual seasonal uplift in third-quarter volumes had failed to materialise.

The company is using flexibility in its manufacturing base to counter cost inflation pressures, adding that longer-term prospects are boosted by factors such as demand for low-carbon heating solutions or improved building ventilation.

Boyd’s investment took place at 250p, which is 58% below where shares started the year. City firms Peel Hunt and Deutsche Bank have price targets of 350p and 447p respectively, believing that current trading conditions are largely reflected in the share price.

The latter said: “Genuit remains a well-run, high-quality company with ambitious long-term growth prospects.” The shares closed the week at 262p.

Will Aston Martin shares motor?

Sir Nigel Boardman, a non-executive director of Aston Martin Lagonda, bought shares worth £35,000 at 90p after the luxury car maker’s valuation fell sharply on Wednesday.

The latest setback for shares came as the Warwickshire-based company said that a shortage of interior parts had delayed about 400 vehicles due for delivery in the third quarter.

The supply chain challenges resulted in a cash outflow of £106 million in the period, with Aston Martin now expecting the sale of between 6,200 and 6,600 vehicles this year, down from its previous estimate of more than 6,600.

A 28% rise in average selling price to £189,000 offered encouragement, but the resulting 33% lift in revenues to £315 million for the three months to 30 September was more than offset by rising costs as underlying earnings fell 10% to £21.2 million.

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Executive chairman Lawrence Stroll told investors that demand had been “very impressive”, with an acceleration in orders for the new DBX707 sports utility vehicle among highlights.

He said the supply chain headwinds were improving in the fourth quarter and that the medium and long-term outlook remained robust as the company continues to target wholesale volumes of 10,000, £2 billion revenues and £500 million earnings by 2024/25.

Aston Martin bolstered its balance sheet in September through a discounted £654 million fundraising, but shares have weakened and closed the week at 111.95p. Deutsche Bank remains cautious about prospects after lowering its price target from 180p to 145p.