Insider: Do these two big sales spell trouble?

Breedon stake cut in half

A strong set of results early this month provided the springboard for another leg-up in Breedon's share price. Trading at around 12p when Marwyn Materials bought the business in 2010, they made a record high of 81.5p two weeks ago.

Pre-tax profit rocketed by 50% in 2016 to £46.8 million on revenue up 43% to £455 million, giving underlying earnings per share of 3.49p.

Clearly, there was help from Hope Construction Materials, bought last summer for £336 million in what is Breedon's largest ever acquisition. But the original business had a blinder, too, as executive chairman Peter Tom explained.

"2016 was arguably the most eventful year in the group's history," he said. "We completed our largest acquisition to date, invested a record amount in our business, began supplying our biggest ever contract and delivered an excellent financial performance - all against the background of an uncertain economic environment and challenging trading conditions in many of our markets."

And the government's commitment to substantial investment in the UK's infrastructure alongside growth in the private housing market "is expected to bring significant medium- and long-term benefits to our business".

City experts predict sustained organic double-digit growth in earnings and, after the latest rally, it will have to do that if it's to justify a forward price/earnings (PE) ratio of over 20, a big premium to the sector.

With Howard Seymour, an analyst at Numis Securities, setting a price target of 82p, Breedon non-executive director David Williams has decided to halve his substantial stake in the business.

"He has built a reputation for creating significant shareholder value through both organic and acquisitive growth, as well as leading turnaround situations," reads his biography on the Breedon website. And he has.

Offloading 5 million shares at 76p bagged the Marwyn founder a tasty £3.8 million.

Lakehouse man makes a million

Our resident stockpicker Edmond Jackson backed Lakehouse in August last year at 30p. It had just issued a third profits warning, but Edmond saw value and promise.

He was right, and the shares are currently up 46% at 44p. Then, a couple of months ago, Edmond suggested further gains were possible if "new management can navigate through choppy UK public services".

And earlier this month, there was news of a £39 million four-year metering contract in the West Midlands with Scottish Power. Executive chairman Bob Holt also confirmed that Lakehouse was performing in line with expectations and that he expected a strong second half performance.

It was interesting to read comments from finnCap analyst Guy Hewett after full-year results in January, when an under-performing property services division and carbon pricing reductions ruined profits.

Lakehouse appeared near the bottom of the broker's sector rankings, but Hewett pointed out that "strong returns could, of course, be made if any of these turn their fortunes around, and management has been changed at Lakehouse, Serco and Mitie."

There is potential here, then, but chief operating officer Michael McMahon has taken an opportunity to flog stock at close to a 10-month high.

Selling 2.5 million shares at 43p netted the founder of Everwarm, which Lakehouse bought in 2014, nearly £1.1 million. That's a minor setback for the bulls, but he still owns almost 5.5 million shares, or 3.5% of the business, so plenty of skin still in the game.

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.