Insider: These bank shares are 'too cheap'
Banking on Barclays
Barclays shares had a nice run up to first-quarter results published on the last trading day of April, ending the previous session at a one-month high. Unfortunately, results failed to match expectations, and the shares have since fallen by 7%, surrendering all those gains.
However, it could always be worse. Barclays shares plunged to a post-referendum low of 121p, but have risen more than 70% since.
That's enough for Ashok Vaswani, who runs Barclays UK which will become the lender's ring-fenced bank. He pocketed nearly £1.4 million after selling 650,230 shares at 212p on results day.
Still, like most top brass at Barclays and other lenders, the Mumbai-born accountant, former private equity man and Citigroup banker, has amassed a small fortune in shares as part of his salary and through various bonus schemes.
There is plenty more where that came from.
More interesting is the trading activity of Sir Ian Cheshire who was appointed non-executive director on 3 April.
Not only does Sir Ian join the board, but he's also appointed chairman designate of Barclays UK. It's not without controversy, however, with the current chairman of Debenhams having been on the board of Bradford & Bingley before it was nationalised in 2008.
Still a director at Whitbread, the former executive chairman of B&Q owner Kingfisher, has just bought 50,000 Barclays shares at 210p. Admittedly, it's clearly a show of commitment, and hardly puts a dent in the well-remunerated executive, but what are his chances of turning a profit on his initial £105,000 stake?
David Lock, banks analyst at Deutsche Bank, thinks he will, although even this supporter has tempered his enthusiasm.
A week after the results, which missed forecasts largely on weaker revenue at the investment banking division, he's repeated his 'buy' rating although the price target is trimmed from 250p to 234p, still implying over 12% upside from here.
"Our earnings forecasts fall on lower revenues, but we still have Barclays reaching a 13% CET1 by 2019, despite including a number of capital drags (litigation, [risk-weighted assets], inflation, pension)," says Lock.
"Trading at 0.7x [tangible net asset value] and 9.5x 2018e EPS we think the stock is too cheap."
Abcam: it's not rocket science
Shares in Abcam, the Cambridge-based firm which supplies antibodies to scientists, hit a new high following interim results published on 6 March. However, within a fortnight they had fallen by 16% to below 800p for the first time since January.
Management spotted an anomaly here and began quietly picking up stock. And no wonder; revenue grew by 30%, or 10% at constant currency, ahead of the market. It also maintained guidance for 9-11% growth for the full-year at unchanged currency.
A 50-basis point improvement in underlying operating margin to 31.2% was better than expected, forcing analysts to upgrade earnings per share estimates. Stefan Hamill, an analyst at Numis Securities, predicted more to come at the final results.
Dr Julie Simmonds at Panmure Gordon is less optimistic, arguing that maintaining that 10% underlying growth rate "is becoming increasingly challenging for Abcam, given its size and leading market share".
"We retain our 'sell' recommendation and 680p target price," she said. There's the small matter of a price/earnings (PE) ratio of 30 or more, depending on which analyst you speak to, although it has always traded on eye-watering multiples. It will have to keep growing quickly to justify it, however.
Still, Abcam shares have bounced back 15% since from a low of 797p to 913p this Friday, reinforcing confidence among top brass to pick up cheap stock.
This week, finance director Gavin Wood coughed up almost £51,000 for 5,700 shares at 889.75p, adding to the 5,815 bought at 842.6p on 17 March. That takes his total spending since the results to almost £100,000.
Chief executive Alan Hirzel has also been active recently, buying 6,000 shares at 839.5p and a further 6,000 at 839.5p. Chairman Murray Hennessy has snapped up 5,922 at 847p and non-exec Mara Aspinall 2,370 at a whisker under 849p.
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.