Insider: BT bosses load up on shares

We look at some of the latest director deals and what investors should make of them.

BT (LSE:BT.A) shareholders wondering over the weekend how bad things will get for the telecoms giant can at least console themselves that boss Philip Jansen has not given up hope.

The CEO's purchase last week of £2 million of shares at a price of 109p comes with the mood among rank-and-file investors at its lowest ebb after the loss of the prized dividend.

The suspension of the pay-out for the first time ever left shares at a decade-low and below 100p briefly for the first time since 2009. They had been near to 500p in 2015 and still over 200p when ex-Worldpay boss Jansen embarked on one of the City's most challenging jobs in February 2019.

That Jansen still enjoys plenty of support reflects the scale of his task, with huge spending on 5G and fibre broadband constrained by a pension deficit and net debt stubbornly high at £18 billion. Not only is the job a regulatory minefield, BT is still in need of modernisation, and now there is Covid-19 and the potential merger of O2 and Virgin Media to worry about.

This is not the first time that Jansen has bought shares, with the £3 million he spent last June at a price of 202p now worth half that amount. He also picked up another £1 million of stock at 171p in September, as well as £2 million prior to his appointment in November 2018.

A reported £43 million windfall when his former employer Worldpay agreed a £32 billion takeover by a US technology company should at least cushion the blow of BTs falling share price. The 53-year-old is on a basic BT salary of £1.1 million a year, fixed for five years.

Jansen's move was not the only director disclosure from BT last week. The wife of chairman Jan du Plessis added £53,000 worth of stock at a price of 105.7p, and Iain Conn, non-executive director at BT and boss of Centrica until March, picked up a similar amount at a slightly higher price of 107.9p.

Source: TradingView. Past performance is not a guide to future performance.

The shares stood at 108.5p this morning, having surged 5% on Friday amid speculation that BT is considering whether to sell a stake in its infrastructure business Openreach. As well as the company's denial of any such move, analysts have pointed out that last week's purchases would not have been possible with management in possession of material information.

With so much bad news out of the way, the shares are rated a 'cautious buy' by some City analysts. Our own chart expert John Burford recently examined a potential return to 160p.

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Land Securities (LSE:LAND) is another struggling blue-chip company where the CEO has taken the opportunity to snap up shares. In the case of Mark Allan, last week's purchase of £150,000 of stock at a price of 502p was his first chance to do so since starting in the job on 1 May.

As with Jansen at BT, Allan has an unenviable task ahead of him. Last week's annual results included a dividend suspension and showed that shares in the commercial landlord are trading at a discount of more than 50% to the current net asset value per share of 1,192p.

The Covid-19 lockdown resulted in it collecting only 63% of its quarterly invoiced rent in March, with Landsec expecting that June's quarter will be even worse. It is a daunting task, but Morgan Stanley said Allan's background at Unite and St Modwen Properties meant the new CEO's arrival could be well timed if he brings about sweeping change when needed most.

Like many blue-chip CEOs, Allan is required to build up and maintain a minimum shareholding equal to 300% of his £800,000 base salary.

• ii view: Land Securities dumps the dividend

On the AIM junior market, Burford Capital (LSE:BUR) said that CEO and co-founder Christopher Bogart had upped his stake in the business litigation funder to 4.11% after buying another 50,000 shares.

The price of 483p compares with the 1,669p seen in July 2019, prior to the high-flying company coming under attack from American short-seller Muddy Waters.

The shares have improved from 280p in mid-March, with Burford optimistic that Covid-19 will create the likelihood of business opportunities going forward. It said in late April that current delays in the realisation of Burford's assets were timing rather than substantive and that the risks to its business were considerably less than many other companies.

Before co-founding Burford in 2009, Mr Bogart held numerous senior executive positions with Time Warner. Chief investment officer Jonathan Molot also bought 50,000 shares last week, taking his stake in Burford to 4.38%.