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4 shares the pros are buying and selling

Our regular roundup of trades by professional investors, featuring Moss Bros, Eckoh, Dunelm and Ilika.

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Key stats
Market capitalisation£68m
No. of shares out101m
No. of shares floating84m
No. of common shareholdersnot stated
No. of employees938
Trading volume (10 day avg.)1m
Turnover£128m
Profit before tax£14m
Earnings per share5.39p
Cashflow per share11.92p
Cash per share19.36p

Moss Bros

Citywire AAA-rated income seeker David Taylor and AA-rated colleague David Horner have upped their position in high street suit retailer Moss Bros (MOSB), as a profit warning sent its shares tumbling. 

Taylor and Horner upped their stake in the business from 4.6% of the shares to 5.1%, worth £3.4 million at a price of 72p, down from a recent high of 120p in May last year.

The shares, which are back at a valuation last seen four years ago, are primarily held in their £569 million Chelverton UK Equity Income fund.

Moss Bros last week said profit would disappoint following ‘lower footfall than expected in December’, adding it expected ‘challenging retail conditions to continue for the foreseeable future’.

Non-food retailers experienced a difficult holiday season as inflation put pressure on real incomes.

At their current price, shares in Moss Bros offer a dividend yield of 9%. Peel Hunt reiterated its ‘buy’ rating last week on a price target of 125p.        

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Key stats
Market capitalisation£1,284m
No. of shares out202m
No. of shares floating96m
No. of common shareholdersnot stated
No. of employees6156
Trading volume (10 day avg.)1m
Turnover£956m
Profit before tax£145m
Earnings per share36.09p
Cashflow per share51.04p
Cash per share8.63p

Dunelm

Income investor Martin Cholwill has increased his holding in homeware retail company Dunelm (DNLM) after a 15% drop in its share price over the last three months.

The manager of the Royal London UK Equity Income fund has taken his stake in the business from 4.9% to 5.3% of the shares, worth £67.5 million at a share price of 637p, down from a 52-week high of 760p.

In its latest trading update, Dunelm revealed a 13.6% rise in total revenue to £297.5 million in the quarter to 30 December 2017, boosted by continued sales growth. Overall the company said it was on track to deliver good full-year profit growth.

George Salmon, equity analyst at Hargreaves Lansdown commented: ‘While we’ll be keeping an eye on margins from here on, it’s hard not to be impressed by the progress made in the last six months or so. The acquisition of Worldstores gives the group greater online exposure, an area it’s clearly looking to leverage.’

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Key stats
Market capitalisation£21m
No. of shares out78m
No. of shares floating74m
No. of common shareholdersnot stated
No. of employees38
Trading volume (10 day avg.)3m
Turnover£1m
Profit before tax£-4m
Earnings per share-4.84p
Cashflow per share-4.56p
Cash per share6.90p

Ilika

Citywire AA-rated small cap veteran Giles Hargeave has ramped up his stake in high-tech materials and battery developer Ilika (IKA) as its shares slid to a four-year low.

Hargreave upped his investment in the business from 3.6% of shares to 10.4% of the business last week, with the shares trading at around 23p.

He was immediately rewarded with a surge in the shares, which leapt 22% to 27.8p on Friday.

The shares are held in his £1.1 billion Marlborough UK Micro Cap Growth fund, which he manages alongside AA-rated co-manager Guy Feld. 

Ilika shares have headed consistently lower since reaching 106p in 2014. That gained momentum with a warning about delays to licensing revenue in early 2017, with shares halving since.

Hargreaves aggressively upped his stake as fund house Ruffer dumped the 9% of Ilika shares it formerly held in its CF Ruffer European fund. Numis rates the company a ‘buy’ on a price target of 80p.  

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Key stats
Market capitalisation£108m
No. of shares out252m
No. of shares floating211m
No. of common shareholdersnot stated
No. of employees273
Trading volume (10 day avg.)1m
Turnover£29m
Profit before tax£6m
Earnings per share0.56p
Cashflow per share1.99p
Cash per share2.49p

Eckoh

Citywire AAA-rated small cap stockpicker Harry Nimmo has pared his stake in online payments business Eckoh (ECK) as its shares pull back from the post dotcom-bubble high they reached last year.

Nimmo reduced his holding in the company from 6.4% of the shares to 4.8% worth £5.2 million at a share price of 42.9p, down from 54p in August 2017.

The shares are held in his £352 million Standard Life UK Smaller Companies trust, among the largest holders of the company.

While a long way from the 250p that Eckoh traded at in 1999 during the dotcom boom, the valuation is nonetheless much improved from the single digit valuation of much of this century. 

Investors have reassessed the stock as it has begun to demonstrate traction in the US, with its North American wing writing $8.3 million (£5.9 million) in contracts last year, lifting revenue 20%. 

Analyst Berenberg rates the company a ‘buy’ on a price target of 65p.

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