Raking through director deals

Taking a look at directory deals on Digital Look to see what’s interesting. Four that stick out:

IPF – International Personal Finance

A provider of home (read "door to door") credit. It provides small sum, short-term, unsecured cash loans with terms ranging period of around 12 months by money transfer to a bank account, and an optional personal home collection service provided by agents who deliver the loan to and collect repayments from the customer’s home each week.

IPF is the second-highest holding of Edward Legget, an AAA-rated manager at Standard Life Inv UK Equity Unconstrained. He is featured on Citywire.

IPF was floated in mid-2007. It has operating margins over 15%, a high ROE of 23% and a high return on total capital. It’s currently trading on a PER of 8.9. Interest cover is 3.34. I also notice that net cash flows have been consistently below net profits – except for the results reported in March 2010. Could be tricksy, this one. Z-score is fine at 4.21. Earlier this month, Bloomberg reported that IPF saw Q1 PBT fall 25 percent because of higher costs and weaker exchange rates. Hmmm.

Directors bought £486k this week.

My gut instinct tells me to avoid this company, despite the numbers. It definitely falls into the category of scuzzy business models, IMHO. As we’ve seen with companies like CPP and HSV (Homeserve) – and I’m sure I’m aware of others but can’t think of them off the top of my head – they can be the kind of companies to bite you in the arse out of the blue. Let us not forget Cattles, a company in a similar line of trade that went bust in late 2009. It, too, showed many years of high ROE and operating margins.

We shall see.


RIIC – Rights & Issues Inv Trust Capital Shares

RIIC is a split capital trust. Director S Knott bought £2.4m shares this week, so he seems quite keen. RIIC has a market cap of £43.7m, and a discount to NAV of 28.1%, which is obviously very high. There are very big holdings from other Knotts.

The latest financial statements (PDF) look fairly simple, which is nice. It’s always interesting to know their holdings, and they declare an interest of at least 3% in the following companies: Chamberlin, Colefax Group, Coral Products, Eleco Holdings, LPA Industries, Macfarlane Group, Renold, Scapa Group, Titon Holdings, Treatt, VP Group.

Their top 10 holdings are Brammer, RPC, Scapa, Colefax, Diploma, Hill & Smith, VP, RPS, Macfarlane, Domino Printing Sciences. Some familiar names cropping up here.

The NAV performance has been reassonable, too. Over the last 10 years, it has increased at a rate of 4.9% pa, compared with the All-share of 1.3% pa. No Warren Buffett – but there share selection doesn’t seem too bad, they’ve probably outperformed most OEICs over a similar period, the directors have bought in big-time, and the discount is huge. That’s quite interesting, don’t you think?

Website: http://www.rightsandissues.co.uk



Ah yes, RM.. That will ring a few bells. Directors buy £480k this week.

It supplies to the education sector. It does test outsourcing, data analysis for teachers, classroom technology, and so on. Why spend 20 quid on a whiteboard when you can blow a few grand on an electronic one?

Actually, a Panasonic Panaboard 86" UB-T880W-G Interactive Whiteboard costs £1499. It’s an oversimplification to say that that’s all that they sell. Their products aren’t a complete rip-off. They sell a Linksys WAG160N-UK Wireless-N ADSL2 + Gateway for £63.66+VAT. On Amazon, a Linksys by Cisco WAG160N Wireless-N Modem Router – 300 mbps (for ADSL / telephone line connections i.e BT Broadband) costs £57.99 inc VAT.

I don’t know if departments are able to negotiate discounts, as it’s normal in business to buy things cheaper than catalogue prices – although I assume that most teachers are a bit dozy when it comes to choosing suppliers.

Now that I’ve seen at their website, their business doesn’t look half as insane as I originally thought it was.

I had written about RM back in October 2011. RM was one of "3 Great Growth Shares for 2010", according to a Motley Fool article. They were shares that went horribly, horribly wrong. "Oh, how I wish I’d never read this", one reader wrote. RM slid 70% since the article was published to the time of my article – which turned out to be their best-performer. Oops.

I had no faith in RM., but in fact it has risen from 46.8p to 81p. It’s managed to make fools out of everyone. Well, me and Alan Oscroft. Maybe you’ll fair better.


SBD – Songbird Estates

Songbird Estates plc is engaged in the management of its investment in its main subsidiary, Canary Wharf Group (CWG). CWG specializes in integrated property development, investment and management focusing on the Estate (consisting of North Quay, Heron Quays West, including Newfoundland and Riverside South) and central London. CWG is also engaged, through joint ventures, in the development of Wood Wharf and the redevelopment of 20 Fenchurch Street. As of December 31, 2010, the retained investment portfolio consisted of 16 completed properties (out of the 35 constructed on the Estate) totaling 6.9 million square feet of Net Internal Area (NIA)

Directors bought £233k of shares last week.

Gearing is 309%, and interest cover is 1.02, which isn’t healthy. it’s on a PBV of 0.88. A poster on ADVN claims that it is selling at a 40% discount to NAV, so presumably you’ll have to dig depper to find out what’s going on there. Seems pretty risky.


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About mcturra2000

Computer programmer living in Scotland.
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