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4 shares the pros are buying and selling

Our weekly roundup of trades by professional investors, featuring Somero Enterprises, RhythmOne, Arrow Global and Pets at Home.

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Key stats
Market capitalisation£7,184m
No. of shares out5,600m
No. of shares floating5,590m
No. of common shareholdersnot stated
No. of employees38278
Trading volume (10 day avg.)25m
Turnover£27,102m
Profit before tax£2,402m
Earnings per share31.19p
Cashflow per share48.18p
Cash per share34.51p

RhythmOne

Hedge fund manager Martin Hughes has upped his stake in digital advertising company RhythmOne (RTHM), which recently completed the acquisition of YuMe.

Through his asset management business Toscafund, Hughes, one of Europe’s most successful hedge fund managers, increased his holding in the business from 23.6% to 24.2%. The stake of 18.8 million shares is worth around £43 million at a share price of 232p, down 41% over 12 months. The shares are mainly held in the Tosca Mid Cap, Opportunity and Micro Cap funds with the rest in the Pegasus fund.

As part of the acquisition of YuMe, RhythmOne announced that it is restructuring its board and appointed Eric Singer as chairman. In a statement to the market chief executive officer Ted Hastings said: ‘We are pleased with the results we achieved during the period, demonstrating progress against our targets in terms of revenue growth, profitability and product integration.’

He added: ‘Strategically, we expect our programmatic platform to serve as the company's principal growth driver, reinforced by significant scale of quality supply, cutting edge technology and unique, data-driven targeting capabilities.’

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Key stats
Market capitalisation£632m
No. of shares out175m
No. of shares floating167m
No. of common shareholdersnot stated
No. of employees1135
Trading volume (10 day avg.)m
Turnover£236m
Profit before tax£107m
Earnings per share14.74p
Cashflow per share19.60p
Cash per share462.05p

Arrow Global

Citywire AA-rated pan-European equity investor Alexander Darwall has pared his stake in listed debt collector Arrow Global (ARW) as its shares begin to weaken from a record high reached last year.

Darwall reduced his holding in the business from 16% of shares to 15.7%. The stake of 27.6 million shares was worth £107 million at a share price of 388p last week when the disclosure was made. This is 16.6% lower than its high of 470p last August.

His £1.9 billion Jupiter JGF European Growth is the largest owner of the stock, followed by colleague Steve Davies’ Jupiter UK Growth fund. Darwall also owns it via his Jupiter European Opportunities (JE) investment trust.

Arrow specialises in purchasing defaulted debt from banks and utilities. The market has expanded in the last decade as regulation has encouraged big banks to offload potential liabilities. The company rapidly expanded into Europe last year, with around 50% of purchases made outside the UK. Numis this month lifted its guidance to buy on a price target of 537p. The shares closed on Friday at 360p, down 4p on the day.

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Key stats
Market capitalisation£850m
No. of shares out500m
No. of shares floating456m
No. of common shareholdersnot stated
No. of employees6811
Trading volume (10 day avg.)1m
Turnover£834m
Profit before tax£130m
Earnings per share14.95p
Cashflow per share20.83p
Cash per share11.64p

Pets at Home

Citywire AAA-rated midcap veteran Richard Watts has upped his stake in Pets at Home (PETS) as the retailer’s shares fell back close to record lows.

Watts increased his holding from 14.8% of shares to just over 15%. The position of 76.1 million shares was worth £124 million at a share price of 165p, down from 241p in early 2017.

The shares were primarily held in his £3.4 billion Old Mutual UK Mid Cap fund, with a smaller stake in company chief executive Richard Buxton’s £2.3 billion UK Alpha fund.

Investor excitement about the stock drove it from a 2014 admission price of 238p to a peak of 311p in 2015. Since then scepticism has mounted however, pushing it as low as 154p last year. The shares closed last Friday at 170.5p.

Analysts tracked by Reuters are equally split between buy and sell/hold guidance, on a median target price of 196p. The company reported 9.6% revenue growth over the three months to January.

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Key stats
Market capitalisation£850m
No. of shares out500m
No. of shares floating456m
No. of common shareholdersnot stated
No. of employees6811
Trading volume (10 day avg.)1m
Turnover£834m
Profit before tax£130m
Earnings per share14.95p
Cashflow per share20.83p
Cash per share11.64p

Somero Enterprises

Citywire AAA-rated small company veteran Mark Niznik has trimmed his investment in laser-guided concrete levelling specialists Somero Enterprises (SOM), as its shares have rocketed to a record high.

Niznik reduced his holding in the company from 10.9% to 9.7%. The stake of 5.4 million shares is worth £19.6 million at the closing price on Friday of 363p, up 2.4% on the day, a gain of nearly 30% over three months.

The shares are held within Niznik’s £476 million Artemis UK Smaller Companies fund, which he has run with co-manager William Tamworth since early 2016.

Somero, which offers precision guidance tools to help lay large fields of concrete flooring, has rerated sharply after reporting 2017 profits would beat prior expectations.

Broker finnCap has twice raised its target price this year, from 350p to 420p ahead of the report, and then to 450p. While the group said it was increasing the level of cash on its balance sheet it added that it also planned to review the current amount committed to dividends.

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Related Fund Managers

Richard Watts
Richard Watts
3/12 in Equity - UK Medium Companies (Performance over 3 years) Average Total Return: 50.39%
Richard Buxton
Richard Buxton
106/155 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 16.45%
Mark Niznik
Mark Niznik
19/56 in Equity - UK Smaller Companies (Performance over 3 years) Average Total Return: 57.78%
William Tamworth
William Tamworth
36/67 in Equity - UK Smaller Companies (Performance over 1 year) Average Total Return: 13.25%
Alexander Darwall
Alexander Darwall
15/193 in Equity - Europe (Performance over 3 years) Average Total Return: 44.02%
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