Insider Special: best and worst director deals of 2023

Investors who followed the lead of Aviva (LSE:AV.), Rolls-Royce Holdings (LSE:RR.) and Barratt Developments (LSE:BDEV) directors and bought shares in these companies will be sitting on big paper profits at the end of 2023.

Insider purchases provide a potential “buy” signal if bosses have put their own money on the line, showing that a board thinks the stock market has gone too far in their reaction to bad news or has mispriced a turnaround strategy.

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We take a look back at our reporting of insider share transactions at more than 100 London-listed companies during 2023.

In the case of Dr. Martens (LSE:DOCS), Spirent Communications (LSE:SPT) or Mobico Group (LSE:MCG), their dealings have been followed by more bad news. But it’s worth remembering that directors are invested for the longer term and that these performances exclude any dividend proceeds.

At Aviva, the decision of chief executive Amanda Blanc to invest £100,000 in August looks well timed based on a purchase price of 381.2p.

Her move followed the market’s lacklustre response to half-year results, when Aviva reported an 8% rise in operating profits and said it remained on track to exceed medium-term targets. Blanc told investors at the time: “There is much more Aviva can and will achieve”.

Boosted by the appeal of a stock with a projected yield of 8.5%, her confidence and the resilience of the UK economy have helped shares back into positive territory for the year to leave Blanc’s investment worth 13% more than in August.

Three new directors of Barratt Developments generated a swift paper profit after the housebuilder’s shares jumped more than 40% in the two months since their investments in October totalling £140,000. Buyers when shares were near their year low at around 397p included investment banker Caroline Silver, who recently hosted her first Barratt AGM. She took over the position of non-executive chair at Barratt on 30 June.

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With Rolls-Royce (LSE:RR.) the year’s best-performing FTSE 100 stock, one of its non-executive directors has reaped big rewards after buying shares on five separate occasions in 2023.

The first purchase by Dame Angela Strank worth £12,400 was made in February when shares were 126p, with subsequent moves in May at 156p and August at 210.4p. The £32,244 spent on the three purchases is now valued at over £60,000, an increase in value of 88%.

Dame Angela, who previously worked alongside Rolls chief executive Tufan Erginbilgic at BP, has made further purchases of £20,000 and £49,500 in the past month at prices of 260p and 273p. These investments have grown by £5,600 based on the 15 December closing price.

Sage non-executive director Roisin Donnelly also picked a good time to spend £78,000 on her first shares in the software business, having joined the board a few days earlier.

The former Procter & Gamble marketing and branding expert bought her shares in February at 782p, which compares with 595p the previous summer. The Newcastle-based provider of finance, HR and payroll tools now stands at 1,169p, valuing Donnelly’s investment at £116,900.

In contrast, June’s show of support by Entain (LSE:ENT) directors after they staked £388,000 on the gambling group’s shares failed to inspire a turnaround in fortunes.

Chief executive Jette Nygaard-Andersen led the buying at a price of 1,210p, but by December she was out of a job and the shares were more than 20% lower as one of the worst performing stocks in the FTSE 100 index.

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Things also went from bad to worse for four directors of 5G testing firm Spirent Communications after they spent £200,000 in March with shares at a three-year low.

They made their investments at 180p, but shares fell below 100p in October, with the hit to the value of their purchases amounting to £70,000 despite an end-of-year upturn.

At Dr Martens, July’s £400,000 swoop by chief executive Kenny Wilson failed to signal an upturn in fortunes for the bootmaker after a string of profit warnings, mainly caused by supply bottlenecks at its new Los Angeles distribution centre.

Wilson’s purchase was made at 129p, but shares traded near 90p in December after the company warned that US trading conditions were increasingly difficult.

In June, Mobico directors including chief executive Ignacio Garat declared collective investments totalling £150,000 in support of the National Express firm’s recovery.

They made their move at about 107p, compared with 140p at the start of the year. But the decline for the FTSE 250-listed stock accelerated after October’s suspension of dividend payments and warning that its profits turnaround is taking longer than expected.

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Among selling chief executives, Rentokil Initial boss Andy Ransom raised £6.3 million in April before this autumn’s downturn in US trading performance left shares more than 30% lower.

When Ransom made the disposal at 619p — his first since he joined the board in 2008 — Rentokil had just told investors the integration of major US acquisition Terminix continued to make progress in line with expectations.

In November, Ransom spent £200,000 backing Rentokil Initial (LSE:RTO) shares at a price of 438p.

July’s £1 million sale of QinetiQ Group (LSE:QQ.) shares by boss Steve Wadey took place at 345p, which compares with the FTSE 250 company’s 305p towards the end of the year.

Balfour Beatty (LSE:BBY) boss Leo Quinn also raised £275,000 in April through the sale of shares at 373p. By the time he returned to the market four months later they were trading at 310p after he spent £175,000 topping up his stake.