Insider: buying at three FTSE 100 stocks and an AIM struggler

It's been the worst first half of a calendar year for stock markets that most of us can remember, but company directors are tucking away cheap shares for the long term.

Five directors at IG Design Group (LSE:IGR), the greetings card, stationery and Christmas crackers firm, have bought shares worth £175,000 in support of the company’s turnaround strategy.

The purchases were made after annual results last week showed the significant impact of supply chain cost increases and Covid-related freight availability issues.

Despite revenues growth of 11% to $965.1 million (£792.9 million), the Bedfordshire and South Wales-based company slumped to an adjusted loss of $1.3 million (£1.1 million) compared with a profit of $32.8 million (£27 million) the previous year.

• Invest with ii: Top UK Shares | Share Tips & Ideas | Open a Trading Account

IG Design, which used to be known as International Greetings, listed on the London stock market in 1995 and now has 4,000 staff and 11,000 customers worldwide. Its brands include Tom Smith, which is the official supplier of Christmas crackers to the Royal Household.

The impact of the supply chain pressures, which included a trebling in freight rates over the year and a 50% jump in the price of paper, were particularly felt at Design Group America.

• Five AIM share tips for 2022: a brutal first half
• How AIM shares can bounce back from 2022 crash
• Six AIM shares for dividend income

The company’s largest division recorded a loss of $11.7 million (£9.7 million), prompting a change of leadership and the launch of a plan to reduce complexity, improve efficiency and rebuild margins.

There’s also been an overhaul at board level, with Stewart Gilliland and Lance Burn now in the interim roles of executive chairman and chief operating officer respectively.

The pair bought shares worth a combined £56,400 following Tuesday’s results, with senior independent director Mark Tentori and non-executive Clare Askem each picking up £20,000.

Anders Hedlund, who founded the group in 1979 and remains on the board as a non-executive director, also purchased shares worth almost £80,000 last week to take his stake to 23.5%. He served as joint chief executive until 2007.

The various boardroom purchases were made at prices between 70p and 84p, which compares with 441p in October and below 50p at the end of May.

The recent recovery has been aided by last month’s signing of amended banking facilities to support working capital requirements in the current financial year.

IG adds that customer relationships have been sustained despite its troubled year, with a strong order book already at 71% of budgeted revenues for the year.

Gilliland said: “The board and wider management team are fully aligned, focused on mitigating cost pressures and creating a more resilient business. This will provide a stronger base on which we can build in the future.”

• Shares for the future: 25 shares I think are good value right now
• Stockwatch: how plunging confidence might hit company profits
• The Week Ahead: Sainsbury’s, Entain, Persimmon

The AIM-listed shares rallied to 88.5p by Friday but Singer Capital Markets thinks a return to 400p is plausible over the next 18-24 months as the company works on restoring US margins to 5-6%.

Its analyst Matthew McEachran said: “With the key funding risk behind them, valuation is going to be driven by confidence in the extent and timing of management’s US profit recovery plan.”

House broker Canaccord Genuity notes the company trades on a March 2023 earnings multiple of 3.9 times and two times for March 2024, highlighting “inherent value”.

The company is currently searching for a new chief executive, with an update on its roadmap to improved profitability expected later this year.

Canaccord analyst Mark Photiades said: “We continue to believe that the medium-term prospects of the group remain positive and that margins will recover and ultimately advance.”

Activity in the FTSE 100 

Directors at British Land Co (LSE:BLND), Associated British Foods (LSE:ABF) and Experian (LSE:EXPN) have bought shares at the end of a tough half-year for their companies in the FTSE 100 index.

Non-executive Loraine Woodhouse spent £15,000 on British Land shares after the office and retail campuses business was targeted in a bearish note on the real estate sector by analysts at Bank of America.

The purchase by Woodhouse, who has been on the British Land board since March 2021, was made on Friday at 443p. This compares with 556p earlier in the year and the 506p seen this week prior to Bank of America downgrading its target price by 21% to 440p.

At Primark owner Associated British Foods, long-serving non-executive director Emma Adamo spent £736,000 on the company’s shares on Wednesday at a price of 1,636p. The purchase price contrasts with 2,131p in January and Friday’s level of 1,586p as sentiment towards consumer goods stocks remains fragile.

• FIRE movement exposed: is it really possible to retire at 40?
• What happens to UK bank shares in a recession?

Adamo was appointed to the board in December 2011 and is a representative of the company’s biggest shareholder Wittington Investments.

The purchase by Experian director Ruba Borno follows a big reversal in the credit checking company’s valuation since shares topped 3,600p towards the end of 2021. The Amazon Web Services vice-president, who was appointed to the Experian board in April 2018, made her £22,300 investment on Thursday at a price of 2,385p.