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4 shares the pros are buying and selling

Our regular roundup of trades by professional investors, featuring Spirent, IQE, Lonmin and Dunelm.

by David Campbell on Mar 13, 2017 at 05:00

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Key stats
Market capitalisation£1,296m
No. of shares out202m
No. of shares floating95m
No. of common shareholdersnot stated
No. of employees5675
Trading volume (10 day avg.)m
Turnover£881m
Profit before tax£102m
Earnings per share50.33p
Cashflow per share62.78p
Cash per share7.38p

Dunelm

Citywire A-rated dividend seeker Martin Cholwill has continued to load up on shares in home furnishings retailer Dunelm (DNLM) as the stock extends a post-Christmas fall to 20% this year.

Cholwill upped his holding to just over 4% of the company worth £51.7 million at a price of 643p, down from a high of 808p in early January.

The shares are held in his £1.7 billion Royal London UK Equity Income fund. The stock currently yields 4.1%. The manager has upped his holding from below six million shares a month ago.

Numis is among the analysts to still see value in the stock, upping guidance from hold to buy as its price has dropped, on an unchanged target of 825p. The bulk of recent revisions have been sharply lower however, as forecasters warned of inflation eating its margins.

Dunelm boss John Browett told the Daily Mail in January he expected to raise prices on imported goods by around 5% to reflect sterling devaluation.

Key stats
Market capitalisation£337m
No. of shares out676m
No. of shares floating557m
No. of common shareholdersnot stated
No. of employees488
Trading volume (10 day avg.)4m
Turnover£114m
Profit before tax£20m
Earnings per share2.91p
Cashflow per share4.59p
Cash per share0.70p

IQE

Citywire A-rated global small cap veteran Justin Thomson has banked some profits on specialist semi-conductor manufacturer IQE (IQE) following a vertiginous 1172% climb in its shares in the past year.

Thomson cut his investment to just under 11% of the business worth £37 million at a share price of 50p, down from 81 million shares a month ago.

The shares are primarily held in his $5 billion (£4.1 billion) T Rowe Price International Discovery fund, which he has run for almost 20 years.

IQE has soared as it reported success in its growing chip licensing business in pursuit of the same lucrative niche that led to fellow UK tech champion ARM’s acquisition for £24.3 billion last year.

Analysts have cooled on the stock as its price has climbed however, with a median target price of 44p almost 10% lower than current.

Key stats
Market capitalisation£244m
No. of shares out282m
No. of shares floating282m
No. of common shareholdersnot stated
No. of employees24552
Trading volume (10 day avg.)3m
Turnover919m USD
Profit before tax-281m USD
Earnings per share-1.13 USD
Cashflow per share0.12 USD
Cash per share1.14 USD

Lonmin

Citywire A-rated turnaround specialist David Cumming has seemingly lost patience in an ongoing slump in platinum miner Lonmin (LMI), as its shares fall back to a low last seen in 2016’s commodity crash.

Cumming cut his stake from over 5% of the in the business to below a disclosable level.

The shares were held in his £67 million Standard Life UK Equity Recovery fund.

Shares in South Africa’s Lonmin have lost more than a third of their value over the last month, with chief operating officer Ben Moolman announcing he would stand down for personal reasons.

‘It's not ideal that their main technical person is gone,’ noted Peel Hunt analyst Peter Mallin Jones. ‘It's another signal that Lonmin has some real problems.’

Shares in Lonmin have cratered in recent years since it staved off collapse with a deeply discounted rights issue in 2015. Analysts tracked by Reuters rate it a ‘sell’ or ‘hold’ by a margin of 16 to one.

Key stats
Market capitalisation£654m
No. of shares out612m
No. of shares floating605m
No. of common shareholdersnot stated
No. of employees1754
Trading volume (10 day avg.)3m
Turnover376m USD
Profit before tax-35m USD
Earnings per share-0.06 USD
Cashflow per share0.00 USD
Cash per share0.13 USD

Spirent Communications

Citywire A-rated value specialist Alex Wright has upped his stake in network testing and analysis business Spirent Communications (SPT) as a restructuring has begun to pay off and its shares hit a 30-month high.

Wright increased his holding to 5.7% of the company worth £37.6 million at a share price of 106.8p, up 28% over the last six months.

The shares are held in his £2.9 billion Fidelity Special Situations fund.

Spirent broke above 100p last month for the first time since mid-2014, following full-year numbers which reported profits up from $42 million to $46 million (£37 million), despite a 4% fall in revenue.

Lower capital investment by its telecoms clients in addition to a rapidly changing industry had weighed on Spirent in recent years, reducing its margins from around 25% to a low of just over 7%.

The board said it confident of a return to growth this year. Analysts remain sceptical, with a median target price of 90p.

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  • Spirent Communications plc (SPT.L)
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  • IQE PLC (IQE.L)
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  • Lonmin PLC (LMI.L)
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  • Dunelm Group PLC (DNLM.L)
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