The Co-Ordinated Director Share Purchases – A sell signal – ref Kenmare & Quindell

Bulletin Board Morons always tell me that I cannot be right in saying “sell” because a raft of directors have just bought shares. Au contraire – some patterns of boardroom buying are clear sell signals in themselves.

Let’s take Kenmare (KMR). About two months ago after serving up a dog’s dinner set of annual results five directors bought shares. The purchases ranged from 25,000 shares to 209,000 at between 13.2p and 14.89p. In total 509,000 shares were bought.

There is enough liquidity in Kenmare that they could all have bought on the same day and issued one RNS to that effect (each RNS costs £75 to issue). But they did not. The purchases were deliberately spread out so that four distinct RNS releases were issued on four separate days. It was just a PR campaign.

In truth the scale of the purchases (call it £70,000) paled into insignificance with boardroom pay of just over £2 million last year. When a company goes to such lengths to stress how directors were buying you know it is a sell signal, PR puffery and little else. If Kenmare’s directors really believed the stock was cheap they would have bet the ranch on it. They did not.

And as it happens

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