Insider: CAB Payments among three stocks on director buy lists

Two FTSE 250 stocks whose high-profile flotations left investors nursing big losses have been given boardroom backing after directors spent a combined £105,000 on shares.

The £50,000 purchase by the chief risk officer of CAB Payments Holdings (LSE:CABP) took place a week after the money transfer firm stunned markets with a profit warning three months into its listing.

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At Aston Martin Lagonda Global Holdings Ordinary Shares (LSE:AML), three directors including chief executive Amedeo Felisa made their investments after shares fell 9% on Wednesday to their lowest level since February.

The car maker’s slide followed a quarterly loss of £117.6 million and lower volume guidance for 2023 due to short-term issues on the production ramp-up of its new DB12 model.

The trio’s purchases were at prices of around 196p, which compares with 1,900p when a previous leadership team floated the business with a value of £4.3 billion in October 2018.

The shares were below 100p a year ago before rebounding to near 300p in the summer after better-than-expected second quarter results boosted confidence in the turnaround plan led by executive chairman Lawrence Stroll.

He said last week the company’s key metrics were showing “strong improvement” and that 2024/25 targets of £2 billion revenue and £500 million of adjusted earnings are within reach.

Stroll also highlighted “extraordinary demand” for the DB12 as the first of the company’s next generation sports cars drives a reappraisal of Aston Martin amongst new audiences.

Alongside Felisa and non-executive director Robin Freestone, the third boardroom buyer of Aston Martin shares was the senior independent director Sir Nigel Boardman.

He spent £35,000, a year after he invested the same amount on shares when they were languishing near a record low at 90.6p. The stock benefited from the insider buying and wider upturn in fortunes for the FTSE 250 index to finish the week at 212p.

Deutsche Bank has a price target of 275p after describing the City’s initial reaction to the results as “excessive”, with analysts at Barclays valuing the stock at 300p.

The week also finished on a stronger note for CAB Payments after the disclosure of the insider purchase by Chris Green, who is one of three directors in charge of day-to-day management at the Crown Agents Bank business.

It is a regulated provider of foreign exchange and cross-border payments with a focus on emerging markets.

The shares closed the week at 68.2p, which compares with around 60p when Green made his investment on Wednesday. They were initially priced at 335p in June’s float worth £851 million, when Green’s 0.26% stake of 665,000 shares was valued at £2.2 million.

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October’s slump came as CAB said revenues growth would be closer to 20% year-on-year, some 17% below previous guidance due to severe headwinds affecting its second largest currency, the Central African franc, as well as the West African franc.

The testing market conditions have compressed margins and reduced trading volume, coming during the traditionally strong fourth quarter for both currency corridors.

Should the difficulties persist, the company warned 2024 revenues could miss previous medium-term guidance for growth of 35%-40% a year.

The rapid turn of events shocked the City, with Barclays lowering its price target by 40% to 200p and Canaccord Genuity reducing to 246p and rating CAB a “speculative buy”.

Broker Liberum, which cut its target to 100p, said last month: “Underlying, we still believe there is a good business but absent further clarity, the stock will mark time.”

Quick paper profit on this bank stock

Elsewhere in the FTSE 250, another of this year’s heavy fallers received boardroom support last week when a director of lender OSB Group (LSE:OSB) spent £78,765 on shares.

The purchase by non-executive Simon Walker came after a reassuring third-quarter update by the OneSavings Bank business included a forecast of loan book growth of 9% for 2023. This compares with previous guidance of 7% and is up from 5% earlier in the year.

Walker, who joined the board in January 2022 and has significant experience in financial services, bought his shares on Thursday at 315p.

They finished the week at 353p, about a fifth higher than where they were before the update. However, they had been over 450p prior to a July profit warning, when the buy-to-let specialist revealed a big one-off hit as customers rushed to lock in new fixed-term deals.

The changed behaviour in response to higher interest rates meant much less time spent on the reversion or variable rate when deals ended. As accounting standards recognise interest income evenly over the expected life of a mortgage, OSB said it would need to book a provision of up to £180 million in half-year results.

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Chief executive Andy Golding, who spent £100,000 on shares when they were 396.5p a few weeks after the summer profit warning, said last week that OSB is well placed to deliver “attractive and sustainable returns for shareholders through the cycle.”

He highlighted the benefits of a strong capital and liquidity position as well proven risk management capabilities and a focus on professional and portfolio landlords.