Insider: TalkTalk, Laird, SDL

Is Harding all TalkTalk?

TalkTalk's story has been well-told over the past few weeks. A cyber-attack has proved less damaging than first feared, at least in terms of accounts hacked, but overcoming reputational damage will take time. And confidence in chief executive Dido Harding is at rock bottom, too.

As the story broke that hackers had potentially accessed the accounts of TalkTalk's four million customers, Harding was asked whether the data was encrypted. "The awful truth is, I don't know," she told the BBC. Eeek!

Despite a tough few weeks for the Conservative peer, Harding thinks the share price has fallen far enough. She's just spent £100,000 on 40,966 TalkTalk shares at 244p each, taking her stake to 4.3 million shares worth a tidy £10.5 million.

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Certainly the one-off financial impact  - put at £30-£35 million - could have been worse, and this week's half-year results were decent enough. Strip out the cyber hit and the company is on track to hit full-year forecasts, and the interim dividend goes up by 15% to 5.29p. If, as promised, it raises the final dividend by 15%, too, TalkTalk shares will yield about 7% for the year.

Barclays thinks Harding has made a canny purchase. It cuts earnings per share (EPS) estimates for 2016 from 13.2p to 10.8p, but still tips the shares up to 400p, down from 500p previously. It believes TalkTalk now looks "inexpensive vs peers", given the shares now trade on 11 times EPS estimates for March 2017, 6.5 times enterprise value/cash profits, and offer an 8.9% yield. Challenger peers trade on 21 times, 7.8 times and yield 5.5%, respectively.

New model Laird gets board backing

After last year's third-quarter trading update, we wrote that Lairdtraded at a discount to peers and was "reasonable value".

Shares in the company, which makes the parts that stop your smartphone or tablet overheating and interfering with other devices, subsequently rose as much as 34%. But they've moved steadily lower since August, and management has warned of "weaknesses in the telecoms market and the timing of smartphone product launches".

Full-year results will likely meet consensus estimates, reassures chief executive David Lockwood. And he promises a new operating model in 2017, which will "reshape" the Apple and Samsung supplier over the next 18 months.

Operating from 52 sites globally, with large factories in Europe and North America, is clearly uneconomic. Shrinking that footprint will cost as much as $60 million, mostly exceptionals. Savings, however, will be at least $20 million a year, and there'll be "no impact on the dividend" - Laird yields around 4% currently - or earnings in 2016.

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Top brass is backing the decision with its own money. Vodafone's director of group technology operations, Kjersti Wiklund, only joined Laird's board as non-executive director (NED) this summer, but is already invested.  She spent over £31,000 on shares at 347-351p.

Fellow NED Jack Boyer paid around £24,000 for 7,000 shares at 345.7p, while senior independent director Mike Parker shelled out £59,000 for 17,000 shares at 346.6p.

SDL founder exit triggers rally

SDL has a wide fan base in the City. That doesn’t guarantee success, of course, and shares in the customer experience technology firm have struggled since founder Mark Lancaster retook the chief executive job three years ago.

But last month, and following a string of profits warnings, Lancaster announced he would step down. Within a week of his departure on 31 October directors began buying shares!

Former Sage PLC man David Clayton, who takes on the role of executive chairman until a permanent replacement is found, has just bought almost £300,000 of SDL shares at 402p. Non-executive director Chris Batterham spent £53,000 on 13,105 shares at 407.7p.

But they should have been quicker. News of Lancaster's exit swept SDL shares off a one-year low at around 323p, and within 10 days they had rocketed 22%. Lancaster was heavily criticised for spending his way to profitability, and investors hope that this is a turning point for the company.

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"We think management will now take a hard look at the cost base, product portfolio and sales execution," says broker Numis Securities. "Trading is stated as in-line with expectations, and we understand from management that this is not predicated on any unusual Q4 seasonality."

The shares could be worth 530p, it adds, although given recent history, investors might understandably demand more clarity on direction and rationalisation of the portfolio.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.