Directors Have Bought Big at Aviva, SABMiller, and Cairn Energy

LONDON -- The FTSE 100 index is up 8% since the start of the year and up 24% on its 52-week low. Nevertheless, directors at Aviva , SABMiller , and Cairn Energy have been buying shares in their own companies in today's highflying market.

Aviva
Blue-chip insurer Aviva reported below-expectations results on March 7. What's more, the company slashed its final dividend by 44% and warned investors to expect a cut of the same order for the next interim payout.

The shares dived 13% on the day. Cue heavy director buying, summarized in the table below.

Date of buy

Director

Price Paid (pence)

Total Cost of Buy (pounds)

March 12

Mark Wilson

321

481,667

March 8

Sir Adrian Montague

320

49,720

March 8

Gay Huey Evans

330

16,520

March 7

Michael Hawker

316

15,810


New chief executive Mark Wilson's spend of almost half a million quid was his maiden purchase of Aviva shares. The other three buys, totalling more than 80,000 pounds, were made by nonexecutives.

You can currently buy Aviva's shares at a lower price than any of the directors paid. The shares are trading at 310 pence, or about seven times forecast earnings for the current year. The cut to the final dividend and the board's guidance for the next interim give a yield of 4.7%.

SABMiller
In contrast to Aviva, where directors bought after the shares crashed, SABMiller's shares have been on an upward trajectory, rising almost 50% in 10 months.

Mark Amour, a nonexecutive director of the FTSE 100 drinks giant, recently splashed out 104,115 pounds on 3,000 shares at 34.71 pounds a pop. Amour paid about 20 times forecast earnings for the year to March 2014 and gets a measly 2% dividend yield.

You can buy SABMiller's shares a little cheaper today -- 34.25 pounds at the time of writing -- but the high earnings multiple and low yield have barely changed since Amour's purchase on March 12.

Cairn Energy
The shares of Cairn Energy, the FTSE 250 oil and gas explorer, are pretty volatile, having been as high as 350 pence and as low as 250 pence over the past 12 months.

On March 20, three directors -- chief executive Simon Thomson, his deputy Mike Watts, and managing director Jann Brown -- all bought shares at 283.5 pence Their total spend was 125,000 pounds.

Cairn had net cash and a near-cash investment amounting to 1.8 billion pounds at its last balance sheet date of Dec. 31, 2012. The company's current market capitalization is 1.7 billion pounds at 279 pence a share. Again, as with Aviva and SABMiller, you can buy these shares at a slightly lower price than the directors paid.

Shrewd investors
I can't tell you whether these directors have made shrewd purchases at the prices they paid. But I can tell you about a free and exclusive Motley Fool report that analyzes the huge investment in a British blue chip by one man who certainly does have a track record of making shrewd investments: U.S. multibillionaire Warren Buffett. You can read this in-depth report today and decide for yourself whether Buffett has bought a blue-chip bargain. The report can be in your inbox in seconds -- simply click here.

The article Directors Have Bought Big at Aviva, SABMiller, and Cairn Energy originally appeared on Fool.com.

G A Chester has no position in any stocks mentioned. The Motley Fool recommends Cairn Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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