Insider: significant purchases at AIM big shot and an FX play

The tech industry boss at the helm of £1.6 billion-valued Gamma Communications (LSE:GAMA) has built a £100,000 stake after shares in the company traded at a three-year high.

Martin Hellawell, the former Softcat (LSE:SCT) chief executive who now chairs Raspberry Pi Holdings (LSE:RPI), has led the board of the AIM-listed business telecoms provider Gamma since July last year.

• Invest with ii: What is a Managed ISA? | Open a Managed ISA | Transfer an ISA

He made his first purchase of Gamma shares on Wednesday at an average price of 1,648p, which compares with 1,100p earlier this year and 1,500p before last month’s interim results.

The most recent surge came as Gamma upgraded full-year guidance on the back of a 16% rise in half-year profits to £56 million, figures that drew a positive response in the City.

Analysts at Deutsche Numis raised their price target to 2,300p while Peel Hunt increased by 50p to 1,800p alongside unchanged Buy recommendations at Investec and Shore Capital.

Gamma’s revenues rose by another 10% to £282.5 million, driven by strong adoption of its broadening product set as business communications become increasingly complex. About 89% of revenues were recurring in the period to 30 June.

It boasts a 30% share of all UK business calls, serving SME clients as well as large enterprises including Morrisons, Tui, and the AA. The company uses its own products alongside those of major technology vendors such as Microsoft, Cisco, Amazon, and Ericsson-LG.

In keeping with 10-15% increases every year since its IPO in 2014, Newbury-based Gamma declared a 14% hike in the interim dividend due for payment on 17 October to 6.5p a share.

Thursday marks the 10-year anniversary of its 187p-a-share admission to AIM, a period in which it has grown from £165 million to the junior market’s sixth most valuable stock.

It is now in talks with major shareholders about whether to move to London’s main market, a potential change that would elevate the company into the FTSE 250 index.

The pursuit of a higher profile listing comes as Gamma continues to expand in the UK and Europe, having this year completed the earnings-enhancing acquisitions of voice services provider Coolwave and the contact centre business BrightCloud.

It has also agreed a deal with Cisco to acquire Placetel, making it a leading player in Germany’s market for cloud-based office telephony.

• Sign up to our free newsletter for investment ideas, latest news and award-winning analysis
• Shares for the future: this business is heading for the exit
• Stockwatch: buying for income after a profit warning
• The Week Ahead: Imperial Brands and Ferrexpo star

Investec Securities said last month: “Gamma is the best business telco to be publicly quoted, with a reliable mid-to-high single digit compound outlook for the core business for the next few years, and future M&A the real delta to the long-run investment case.”

Shortly after joining as non-executive chair, Hellawell told investors that Gamma was a company he had admired for many years. The former Computacenter executive joined Softcat in 2006, overseeing its elevation to the FTSE 250 during 12 years with the IT firm.

He said in Gamma’s annual report: “The way we communicate has changed beyond all recognition. Voice is still an important feature but so is video, mail, text, WhatsApp, web chat, chatbots and social media, to name but a few.

“Automation and now particularly artificial intelligence play an increasingly important part in those communications. Security concerns around all those technologies are increasing by the day, so this drives the technology to keep up to combat these threats.

“That is the fascinating universe Gamma operates in.”

Hitting the jackpot

The former boss of National Lottery operator Camelot has staked £100,000 on the share price recovery of Argentex Group (LSE:AGFX), the currency risk management business he chairs.

Nigel Railton has been a board member of Argentex since its listing on AIM in 2019, when shares were priced at 100p for an initial market value of £120 million.

After an initial flourish, the shares have reversed to 33.3p after shareholders were told recently that dividends are highly unlikely in the near to medium term.

The pause in payments follows a strategic reset by new chief executive Jim Ormonde, who has taken charge in the wake of a challenging 2023 for the business.

He has pledged to improve earnings quality by increasing scale within Argentex's existing FX market and expanding into complementary areas, both domestically and internationally.

Ormonde has added significant leadership expertise through recent appointments and is in the process of migrating the business to one technology platform.

• Five ways to retire with a healthier income
• ii view monthly round-up: September 2024
• Share Sleuth: tempting stock is new addition to the portfolio

Half-year revenues recently declined by 4% to £23.9 million, with 19% growth in the number of clients trading offset by 20% reduction in average spend due to lower FX volatility.

Underlying earnings more than halved to £2.1 million but Ormonde said momentum seen in the second quarter had continued to leave revenues flat in the year to 31 August.

When Railton wrote to shareholders in May, he said the company now had “a clear roadmap” to scale the business, reduce earnings volatility and expand its customer offering.

The recently-appointed Post Office interim chair followed this on Wednesday by spending £100,000 in a purchase of 294,387 shares at a price of 34p. Two days earlier, new chief financial officer Guy Rudolph made an investment worth £20,000 at 33p.

Lee Wild, head of editorial at ii, owns shares in Argentex