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4 shares the pros are buying and selling

Our regular roundup of trades by professional investors, featuring Terry Smith’s latest buy.

by David Campbell, Selin Bucak on Mar 26, 2018 at 05:00

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Key stats
Market capitalisation£7,581m
No. of shares out161m
No. of shares floating160m
No. of common shareholdersnot stated
No. of employees42452
Trading volume (10 day avg.)m
Turnover£2,769m
Profit before tax£561m
Earnings per share176.32p
Cashflow per share255.09p
Cash per share84.89p

Intertek (ITRK)

Who’s trading? Citywire AAA-rated Terry Smith

The trade: Growth investment star Smith upped his stake in safety certification and testing business Intertek from 4.5% of shares to 5.1% or 8.2 million worth £387 million at a share price of £47.25.

How have the shares performed: The price of Intertek doubled over the two years to October 2017 to a record high of £54 before going into reverse, and has since slid almost 13%.

What does the company say: Investors have assigned a premium to the regularity and solidity that Intertek has ground out higher margins and profits. Last year continued that form, with revenue up 3% on constant exchange rates and profit up 9% to £438 million.

What’s the outlook? Despite the dip Intertek remains pricey-looking at 27 times earnings. Broker Kepler Cheuvreux last week lifted its target price from £51.90 to £53, but remains an outlier among analysts who rate it a ‘hold’ or ‘sell’ by an eight to one margin, on a median price target of £49.87.

Key stats
Market capitalisation£16m
No. of shares out42m
No. of shares floating25m
No. of common shareholdersnot stated
No. of employees184
Trading volume (10 day avg.)m
Turnover£29m
Profit before tax£2m
Earnings per share1.56p
Cashflow per share4.20p
Cash per share21.17p

Walker Crips (WCW)

Who’s trading? Gervais Williams and Martin Turner

The trade: Miton’s Williams and Turner, who have been selling down their position, continued to reduce their holding in wealth management firm Walker Crips from just under 5% of the shares to 3.6% worth £578,000 at a share price of 38.6p.

How have the shares performed? Walker Crips’ shares are down from a 52-week high of 50p.

What does the company say? In its half-year report for the six months to 30 September, Walker Crips revealed that it increased revenues by 16.7% while underlying operating profit jumped 62.8% to £394,000. Chairman David Gelber stated: ‘We remain in a sound financial position and have continued to trade profitably since the period end. We remain cautious about the short-term outlook, but believe that in this climate the quality of the advice and support we provide our customers will continue to prove important.’

What’s the outlook: The company has been expanding its workforce and has said that it is continuing discussions to acquire new advisers. It is also investing in the development of systems and controls in response to ‘demanding regulatory changes’. Its shares are at a discount to peers on price to earnings ratio of 15.5x and 0.73x price to book. Its dividend yield is 4.9%.

Key stats
Market capitalisation£557m
No. of shares out45m
No. of shares floating37m
No. of common shareholdersnot stated
No. of employees5982
Trading volume (10 day avg.)m
Turnover£2,793m
Profit before tax£70m
Earnings per share112.69p
Cashflow per share127.31p
Cash per share494.59p

Morgan Sindall (MGNS)

Who’s trading? Citywire AA-rated Andrew Paisley

The trade: Pan European small cap manager Paisley upped his stake in construction business Morgan Sindall from 11.9% of shares to just over 12% worth £67 million.

How have the shares performed? Shares are down from a post-crash high of £15.02 last November to £12.46.

What does the company say? The company in February described itself as bullish on the ‘significant’ early results of a decision to focus on politically sensitive urban housing construction, wringing a 46% increase in pre-tax profit to £45.3 million from a 9% increase in revenue last year.

What’s the outlook?: Analysts remain upbeat with Numis, Liberum and Peel Hunt all reiterating buys last month on an average price target of £16.21. The company was this month named as one of two remaining bidders for the mammoth £4 billion mixed commercial/residential Thamesmead Waterfront Peabody development in London’s Woolwich.

Key stats
Market capitalisation£235m
No. of shares out817m
No. of shares floating732m
No. of common shareholdersnot stated
No. of employees13
Trading volume (10 day avg.)2m
Turnoverm USD
Profit before tax-6m USD
Earnings per share-0.03 USD
Cashflow per share-0.03 USD
Cash per share0.06 USD

Savannah Petroleum (SAVP)

Who’s trading? John Bennett

The trade: Bennett reduced his holding in African oil and gas minnow Savannah Petroleum from 5.1% of the shares worth £12 million at a price of 29p, to below a disclosable level.

How have the shares performed? Trading in Savannah was suspended for much of last year as it raised $125 million (£88 million) in new equity to purchase the Nigerian assets of Seven Energy.

What does the company say? Management has promised the deal will be ‘transformational’ although the size of the fund raising at 35p - versus the 42p shares hit in May 2017 - has ensured that the price remains unchanged on where it stood three years ago

What’s the outlook? Barclays, which advised on the deal, slapped a ‘buy’ and a 41p target on the stock at its readmission to the market. The company reported its first operational well up and running this month with further sites well advanced, on estimated reserves of 100 million barrels.

More about this:

Look up the shares

  • Intertek Group PLC (ITRK.L)
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  • Morgan Sindall Group PLC (MGNS.L)
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  • Savannah Petroleum PLC (SAVP.L)
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  • Walker Crips Group PLC (WCW.L)
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Look up the fund managers

  • Andrew Paisley
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  • Gervais Williams
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  • John Bennett
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  • Terry Smith
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