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5 shares the pros are buying and selling

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by David Campbell, Robert St George on Apr 14, 2014 at 05:01

A roundup of trades by professional investors. This time, we look at G4S, Northgate, ZincOx, Phoenix Group and Sinclair IS Pharma.

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Key stats
Market capitalisation£3,802m
No. of shares out1,552m
No. of shares floating1,533m
No. of common shareholdersnot stated
No. of employees648254
Trading volume (10 day avg.)5m
Profit before tax£-246m
Earnings per share-16.94p
Cashflow per share-0.83p
Cash per share40.80p

*Correct as at 11 Apr 2014


Randeep Somel, the previously low-profile manager appointed to run the giant M&G Global Basics fund at the end of last year, is apparently losing some patience with long-time fund laggard G4S (GFS.L).

Somel cut his holding in the company from 79.4 million shares to 78.1 million or 5% worth £189 million at a share price of 244.2p.

He took on M&G’s £3.2 billion wounded-giant of a fund following the retirement of manager Graham French in November 2013, following around two years of sustained underperformance. G4S remains among the top 10 holdings in the fund.

The company has suffered a series of wrong-turns, cock-ups and self-inflicted wounds in recent years, from failing to meet its obligations to provide Olympic security to allegations of fraud.

A rights issue last year placed the company debt on a more secure footing but at the cost of its return on equity. Credit Suisse cut its price target last month from 275p to 245p.

Key stats
Market capitalisation£135m
No. of shares out435m
No. of shares floating404m
No. of common shareholdersnot stated
No. of employees144
Trading volume (10 day avg.)1m
Profit before tax£-16m
Earnings per share-3.72p
Cashflow per share-2.50p
Cash per share1.16p

*Correct as at 11 Apr 2014

Sinclair IS Pharma

Citywire AA-rated Nigel Thomas, one of the most consistent and reliable fund managers in the UK, has banked some profits in wound care and dermatology business Sinclair IS Pharma (SPH.L).

Thomas trimmed his investment in the business from 45.2 million shares to 42.4 million or 9.8% worth £13 6 million at the shares’ current 32p price.

Thomas holds the company in his £4.9 billion AXA Framlington UK Select Opportunities fund, which remains among the top three largest shareholders in the business.

Canaccord Genuity recently reiterated its buy rating on the business with a price target of 38p while Peel Hunt lifted its target price from 46p to 50p, also rated buy.

That followed numbers for the second half of 2013 showing earnings rising from £1 million to £1.1 million while losses fell from £5.8 million to £2.5 million.

Key stats
Market capitalisation£666m
No. of shares out133m
No. of shares floating132m
No. of common shareholdersnot stated
No. of employees2757
Trading volume (10 day avg.)0m
Profit before tax£-7m
Earnings per share-5.52p
Cashflow per share119.75p
Cash per share11.23p

*Correct as at 11 Apr 2014


Old Mutual small and medium-sized company investor Dan Nickols has upped his stake in commercial vehicle hire business Northgate (NTG.L) as the shares continue to drift down from a post-crash high above 600p.

Nickols took derivative exposure to increase his stake in the company from eight million shares to the equivalent of 9.5 million or 7.1% worth £49.8 million at a share price of 524.1p.

The shares are held in his £986 million Old Mutual Smaller Companies fund, a long-term shareholder in the business.

Northgate has steadily traded down after topping out at 615p in early March, although it has remained a faint shadow of its peak pre-crash valuation of £27.08 in 2005.

Broker N+1 Singer reduced its guidance on the stock from buy to hold last month, while upgrading its price target from 525p to 605p.

The company currently trades at 13.5 times last year’s earnings versus a peer group average of 17.4.

Key stats
Market capitalisation£1,446m
No. of shares out225m
No. of shares floating172m
No. of common shareholdersnot stated
No. of employees1265
Trading volume (10 day avg.)1m
Profit before tax£407m
Earnings per share235.26p
Cashflow per share327.75p
Cash per share5,171.06p

*Correct as at 11 Apr 2014

Phoenix Group

Fidelity’s Citywire AA-rated UK equity star Alex Wright has cut his holding in beleaguered insurance and pensions business the Phoenix Group (PHNX.L) as its shares have tumbled.

Wright cut his investment in the company from 12.6 million shares to 8.8 million or 3.9% worth £56.4 million at a share price of 644.1p, down from 750p at the beginning of March.

Wright is a successor to Fidelity’s Antony Bolton, one of the most effective investors the UK has ever produced, and runs the UK equity portion of Bolton’s former fund Fidelity Special Situations.

Phoenix has been hit hard twice in the past month, firstly by the Budget which liberated pensioners who previously had to buy an annuity, and secondly by last month’s announcement that regulators would probe the terms of insurance policies written as far back as the 1970s.

Canaccord last month cut its target price from 865p to 800p, rated buy.

Key stats
Market capitalisation£20m
No. of shares out185m
No. of shares floating116m
No. of common shareholdersnot stated
No. of employees185
Trading volume (10 day avg.)0m
Turnover6m USD
Profit before tax-6m USD
Earnings per share-0.06 USD
Cashflow per share-0.03 USD
Cash per share0.06 USD

*Correct as at 11 Apr 2014

ZincOx Resources

The respected team at Majedie has grabbed troubled ZincOx Resources (ZOX.L) by the horns, buying another four million shares for around £400,000. That means it now owns 7.4% of the business.

ZincOx is developing a recycling plant in Korea, and at the start of April was forced to raise £1 million to complete the project after its cash reserves were drained by repair costs.

To attract investors’ support, ZincOx had to issue new shares at a 37.5% discount. That hit means ZincOx shares have now lost more than half their value over the past year.

‘Whilst I regret having to revert to shareholders to seek further support, we are pleased to see a continuing improvement in production,’ said executive chairman Andrew Woollett.

Majedie co-founders James de Uphaugh and Chris Field – both AAA rated by Citywire – have historically done very well by backing out-of-favour stocks; the largest positions in their £2.5 billion UK Equity fund are currently oil giants Shell and BP. The fund has returned 59.5% over the past three years, compared with an average of 38.6% from its peer group and 31.2% from the FTSE All Share index.

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  • G4S PLC (GFS.L)
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  • Sinclair IS Pharma PLC (SPH.L)
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  • Northgate PLC (NTG.L)
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  • Phoenix Group Holdings (PHNX.L)
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  • ZincOx Resources PLC (ZOX.L)
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