Insider: have these directors got a festive bargain?

With their share prices under pressure, the directors of these four companies have seized the opportunity to top up stakes. Graeme Evans examines the dealings.

23rd December 2024 08:57

by Graeme Evans from interactive investor

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One of the founders of dealmaking SigmaRoc (LSE:SRC) has marked the end of a transformational year for the lime and quarried materials group by spending £60,000 on an increased stake.

Executive chair David Barrett traded shares in the £800 million-valued company at 70.6p on Wednesday, having seen the AIM-listed price drop from 80p at the start of November.

Deutsche Bank said last month that shares deserve to be materially higher at 115p after the $1.1 billion acquisition of assets from CRH made SigmaRoc a leading player in European lime.

The City firm added: “We view this industry as attractive given high barriers to entry, pricing power, and lime being a critical input across diversified end markets.”

The deal, which left CRH owning 15% of SigmaRoc, comprised 16 operating locations with leading market positions across Ireland, the UK, Germany, Czech Republic and Poland.

The acquisition took place in three phases, with five kilns in Buxton, Derbyshire, transferred in March before the completion of the final tranche in Poland at the start of September.

Together with Nordkalk, which it bought in 2021 in a deal that significantly enhanced earnings in the first full year of ownership, SigmaRoc is now the market leader in five European countries and number two in another three.

It is nearing the end of the integration process on the CRH assets, leading to enhanced guidance on the synergies to be delivered by 2027 at 35 million euros (£29 million).

An update in October also revealed that revenues for the first nine months of the year rose 67% to £729 million, with underlying earnings up 88% to £165 million on a margin of 22.6%.

Deutsche Bank expects the company’s guidance for 2026 to eventually show a margin of 23%, alongside a mid-teens return-on-equity and a balance sheet that provides optionality.

However, it notes that the share price is pointing to a 2026 price/earnings ratio of seven times and a discount to its book value. 

The bank added: “Something has to give. We think it will be a materially higher share price.”

Lime and limestone are key resources in the transition to a more sustainable economy, including through the production and recycling of lithium batteries and the decarbonisation of construction materials.

October’s update highlighted robust trading in most markets but with mixed demand in residential construction and the German power and automotive sectors.

Panmure Liberum had a price target of 120p prior to this update, arguing that the company is well placed to deliver double-digit earnings per share growth over the coming years.

It expects the cash-generative nature of the enlarged business should mean leverage falls from 2.6 times, enabling a meaningful uplift in equity as debt falls.

The City firm said a more extensive asset base and broader series of end markets meant SigmaRoc did not deserve to be valued at a 40% discount to FTSE 250-listed Breedon Group (LSE:BREE).

It said: “Over time, we expect investors will increasingly look to chemical and minerals businesses when valuing SigmaRoc.”

Barrett co-founded SigmaRoc in 2016 together with current chief executive Max Vermorken and Charles Trigg and has been its chair since January 2017.

He has over 40 years experience in the building materials sector, having previously taken London Concrete from one site to over a dozen plants around the capital.

Other insider purchases in the final full trading week of the year included one worth £700,000 by the chief financial officer of medical devices firm Smith & Nephew (LSE:SN.).

John Rogers, who joined the board in April having held similar roles at WPP and Sainsbury’s, made his investment at 971p. The FTSE 100 company, which started the year at 1,078p, traded as low as 917p after a revision to 2024 revenues guidance at the end of October.

In the FTSE 250 index, the chief executive of Hollywood Bowl Group (LSE:BOWL) has followed a post-results reverse for the shares of the ten-pin bowling firm by spending £40,000 on an increased stake.

Stephen Burns bought his shares on Tuesday at just below 300p, which compared with 338p in the week before the annual results. Alongside another strong underlying performance, the company revealed a £5.3 million impairment charge relating to its Puttstars mini-golf centres.

Despite some good performances by the brand, it said bowling centres offered higher returns potential and would remain the group's first choice when entering new locations.

At 4imprint Group (LSE:FOUR), chair Paul Moody has responded to the corporate merchandise firm’s poor share price run since the summer by making an investment worth £72,000.

His dealings took place on Tuesday at 4,802p, which compares with 6,140p at the end of July. The group recently reiterated full-year guidance but said the backdrop in its primary North American market was more challenging.

It added: “Our experience is that less buoyant economic conditions represent a market share opportunity for 4imprint as our financial strength allows us to keep investing in the business and to take full advantage of the market recovery when it arrives.”

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AIM stocks tend to be volatile high-risk/high-reward investments and are intended for people with an appropriate degree of equity trading knowledge and experience. 

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