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5 shares the pros are buying and selling

A roundup of trades by professional investors, featuring SkyePharma, Johnson Service Group, NewRiver Retail, Equiniti and Lok’nStore.

by David Campbell on Feb 09, 2016 at 05:00

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Key stats
Market capitalisation£474m
No. of shares out300m
No. of shares floating194m
No. of common shareholdersnot stated
No. of employees4010
Trading volume (10 day avg.)1m
Turnover£292m
Profit before tax£-39m
Earnings per share-13.00p
Cashflow per share-0.40p
Cash per share10.03p

*Correct as at 5 Feb 2016

Metcalf sells as Equiniti heads south

Citywire AA-rated dividend seeker Christopher Metcalf has sold off some of his holding in share registrar Equiniti (EQN) as its valuation slips below its 2015 IPO price amid slowing demand for new share purchases.

Metcalf trimmed his investment to 4.8% of the business worth £22.8 million at a price of 158.8p, down almost 13% this year to below the 165p at which they were issued.

The shares are held in his Old Mutual Newton Higher Income fund, and advanced as far as 185p in December before their reversal.

Equiniti already had to manage down hopes of a valuation above 200p ahead of its admission to public trading in November last year, as global markets turned more volatile. A total valuation calculated as high as £700 million in the summer was eventually revised down to £495 million.

Broker outlook on the stock remains unanimously bullish however, with Goldman Sachs, Credit Suisse and Barclays all starting it at ‘buy’ with price targets of 260p, 210p and 230p respectively.

Key stats
Market capitalisation£293m
No. of shares out331m
No. of shares floating322m
No. of common shareholdersnot stated
No. of employees4723
Trading volume (10 day avg.)1m
Turnover£210m
Profit before tax£9m
Earnings per share2.90p
Cashflow per share12.97p
Cash per share0.07p

*Correct as at 5 Feb 2016

Nickols banks Johnson recovery

Citywire AA-rated small and midcap veteran Daniel Nickols has sold some of his shares in dry cleaning and workwear business Johnson Service Group (JSG) as it bounces back from near-bankruptcy in 2009.

Nickols reduced his holding to just under 6% of the company worth £17.3 million at a share price of 87.8p, up 120% over the last three years.

The shares are held in both his Old Mutual UK Select Smaller Companies and Old Mutual Smaller Companies funds. Aided by regulatory changes which have boosted its workwear division, Johnson has substantially restructured over the last seven years, disposing much of its historic high street chain.

In first-half results the company reported adjusted profit before tax up 18.8% and said it expected full-year numbers to beat market expectation. Investec rates the company a ‘buy’ on a price target of 100p.

Key stats
Market capitalisation£85m
No. of shares out27m
No. of shares floating17m
No. of common shareholdersnot stated
No. of employees143
Trading volume (10 day avg.)m
Turnover£15m
Profit before tax£2m
Earnings per share7.64p
Cashflow per share13.87p
Cash per share8.56p

*Correct as at 5 Feb 2016

Williams seizes on Lok’nStore dip

Citywire AA-rated small-cap income investor Gervais Williams has upped his stake in self-storage business Lok’nStore (LOK) following a 15% drop in its share price over the last two months.

Williams increased his holding to 12% of the company worth £10 million at a share price of 316p, down from an early-December peak of 370p.

‘We remain upbeat about the prospects and we considered it a good time to add given the lower entry price,’ Williams told Citywire. Having climbed more than 200% over the previous three years, trading in Lok’nStore, which owns self-storage units across the south east, has turned choppier.

The shares are primarily held by his £585 million Miton UK Multi Cap Income fund, with a small number in his £335 million Diverse Income trust. Both are co-managed by AA-rated Martin Turner.

House broker FinnCap reiterated a ‘buy’ rating on the stock last month, lifting its target price to 399p.

Key stats
Market capitalisation£802m
No. of shares out233m
No. of shares floating230m
No. of common shareholdersnot stated
No. of employeesnot stated
Trading volume (10 day avg.)2m
Turnover£28m
Profit before tax£40m
Earnings per share36.06p
Cashflow per share36.13p
Cash per share12.18p

*Correct as at 5 Feb 2016

Property pays off for JOHCM pair

Citywire AA-rated equity income veterans Clive Beagles and James Lowen have cut back their stake in property investment business NewRiver Retail (NRRT) as its shares dip from a five year upswing.

The company cut its stake to 4.8% of the business worth £38.4 million at a price of 343p, down 4% from a high of 358p in early December.

The shares are held in their JOHCM Equity Income fund. Citywire AAA-rated Neil Woodford has taken the other side of that trade, heavily increasing his exposure to the business.

Yields on commercial property have, in the case of many sectors such as West End shops, been bid down to record lows in recent years as investors have searched for income in a period of zero rates.

That has caused some angst about the sector’s durability should interest rates in other parts of the economy, such as commercial bonds, begin the process of reverting from extremely low levels.

Key stats
Market capitalisation£412m
No. of shares out105m
No. of shares floating103m
No. of common shareholdersnot stated
No. of employees92
Trading volume (10 day avg.)m
Turnover£74m
Profit before tax£-11m
Earnings per share-12.31p
Cashflow per share-8.32p
Cash per share30.91p

*Correct as at 5 Feb 2016

Flying SkyePharma prompts Denham to take profits

Aviva’s Citywire AA-rated head of European equities Mark Denham has banked some profits on an extraordinary recent run in oral and inhalation drug development business SkyePharma (SKP).

Denham trimmed his investment to 4.9% of the business to worth £20.2 million at a share price of 393p, up 24% over the last three months.

The shares are held in both his £530 million Aviva AM European and £158 million Aviva Investors European Equity fund.

The recent run in SkyePharma, following a series of good new stories, caps a three-year period in which it has appreciated more than fivefold. Last month it said 2015 revenue was likely to beat forecasts while sales of flutiform, its combination asthma therapy, were also ahead of expectation.

Analyst Stifel Nicolaus & Co confirmed its ‘buy’ rating on the company on a price target of 460p.

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  • SkyePharma PLC (SKP.L)
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  • Johnson Service Group PLC (JSG.L)
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  • Newriver Retail Ltd (NRRT.L)
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  • Equiniti Group PLC (EQN.L)
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  • Lok'n Store Group PLC (LOK.L)
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