Big Director Buys During the FTSE 100's Rally to 6,300
LONDON -- The FTSE 100 index is up 7% since the start of the year and up 20% (more than 1,000 points) since last year's summer low. The price-to-earnings ratio stands at 13, and the dividend yield is 3.5%. That compares with a P/E of just 9.5 and a yield of 4% back in June.
Nevertheless, directors at BG Group , Debenhams , and ChemringGroup have been buying shares in their own companies in today's highflying market.
BG Group's crown as the top-rated oil and gas stock among the Footsie's megacaps has slipped of late. Warnings that there will be no volume growth this year and that previous guidance of more than 1 million barrels of oil equivalent per day in 2015 will not now be reached have given shareholders the jitters.
However, these setbacks haven't dented chairman Andrew Gould's faith in the group's longer-term growth story, which is centered on massive oil assets in the Santos Basin off Brazil. Earlier this week, Gould more than doubled his shareholding in the company, investing close to 400,000 pounds at 1,120 pence a share.
The price is little changed since the chairman opened his wallet, and analyst forecasts for the current year put the company on a P/E of 13.5 compared with a previous rating in the high teens.
Debenhams, the department store chain, reported record sales during December in a post-Christmas trading update in January.
Chief executive Michael Sharp was "pleased with our performance in the first four months of our financial year" -- so pleased, in fact, that he bought 100,000 shares at 109.5 pence a pop on the same day. Sharp was averaging down from the 115 pence a share he paid for a previous tranche of 100,000 shares when the company released its annual results in October last year.
You can pick up Debenhams' shares at 95 pence today on a forecast P/E of just more than nine and a yield of 3.5%.
This mid-cap defense group's annual results announced in January were awful but in line with market expectations. This counted as something of a triumph after a previous round of profit warnings, and a strategic update was also well received by the market.
Chief executive Mark Papworth, who had bought 50,000 shares at 225 pence a share soon after his appointment last November, add a further 50,000 following the results. This time he paid 280 pence, splashing out 140,000 pounds.
The share price is little changed. With a forecast P/E of just more than nine and a yield of 3.7%, the rating is similar to that of Debenhams.
I can't tell you whether these directors have made shrewd purchases at the prices they've 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. billionaire Warren Buffett. Read the report today and decide for yourself whether investing legend Buffett has bought a blue-chip bargain. The report is 100% and can be in your inbox in seconds; simply click here.
The article Big Director Buys During the FTSE 100's Rally to 6,300 originally appeared on Fool.com.G A Chester does not own shares in any of the companies mentioned in this article. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.