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7 shares the pros are buying and selling

A roundup of trades by professional investors. This time, we look at Paddy Power, Cranswick, Pittards, Development Securities, WANdisco, XP Power and Cineworld.

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Paddy Power

Small cap veteran Harry Nimmo has continued to sell down bookmaker Paddy Power (PAP), until recently one of his biggest overweight positions, following a disappointing 12 months for the business.

Nimmo reduced his investment in the business from three million shares to 2.6 million or 5.3% worth €136 million (£110 million) at a share price of €51.90.

The shares are held in his £1.4 billion Standard Life UK Smaller Companies (SLS), trust.

Writing earlier this year, Nimmo noted that the company had been one of the biggest drags in the fund in 2013 ‘due to higher levels of competition in the UK market and earnings pressure related to its large-scale investment in new markets’.

He added that despite being a recent laggard the company had nonetheless outgrown his size remit, with shares up 50.9% over three years versus a FTSE 250 return of 32.2%.

Credit Suisse cut its recommendation on the stock from outperform to neutral earlier this month with a price target of €60 while HSBC recently lifted its recommendation from underweight to neutral.

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Key stats
Market capitalisation£878m
No. of shares out264m
No. of shares floating192m
No. of common shareholdersnot stated
No. of employees5498
Trading volume (10 day avg.)0m
Turnover£406m
Profit before tax£21m
Earnings per share12.42p
Cashflow per share26.60p
Cash per share11.38p

*Correct as at 23 May 2014

Cineworld

The UK equity team at Royal London Asset Management has increased its exposure to Cineworld Group (CINE).

The insurer’s investment arm bought another 560,000 shares in the cinema chain, worth over £1.8 million. That means the team now owns 4.2% of the business in total.

The stake is held in a small companies fund managed by Victoria Stewart and a medium-sized companies one run by Derek Mitchell, who is + rated by Citywire.

Mitchell recently explained that he was continuing to back Cineworld despite its shares falling by 12.6% so far this year, following the company raising £110 million to finance the acquisition of an Eastern European cinema operator.

‘Cineworld shares were very weak post the deal with Cinema City International, but the growth outlook looks promising as company projections show an increase in screen numbers of 19% in the UK and 39% in Eastern Europe over the next three years,’ Mitchell said.

His fund has returned 68.5% over the past three years, ahead of the average of 34.6% from his peer group.

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Key stats
Market capitalisation£581m
No. of shares out49m
No. of shares floating45m
No. of common shareholdersnot stated
No. of employees4402
Trading volume (10 day avg.)0m
Turnover£875m
Profit before tax£36m
Earnings per share74.70p
Cashflow per share106.96p
Cash per share15.73p

*Correct as at 23 May 2014

Cranswick

City Financial fund manager Leigh Himsworth has taken a nibble out of food producer Cranswick (CWK).

Himsworth topped up his stake after buying an additional 12,500 shares at £11.97. This brought his total stake through the City Financial UK Opportunities fund up to 175,000 shares, equating to £2 million.

The fund manager highlighted Cranswick’s position as a high quality pork supplier to food retailers, such as Aldi and Sainsbury.

‘They sit in the enviable position of customers trading down from far more expensive lamb and beef, in addition to some customers trading up from the poorer quality end of the spectrum,’ Himsworth noted.

‘Having invested heavily over numerous years, the group are leading in their supplies and production and it is they who the supermarkets turn to when things go wrong elsewhere - note the horse meat issues. A super strong balance sheet and management team second to none, this is one to tuck away.’

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Key stats
Market capitalisation£304m
No. of shares out125m
No. of shares floating124m
No. of common shareholdersnot stated
No. of employees78
Trading volume (10 day avg.)0m
Turnover£79m
Profit before tax£18m
Earnings per share14.91p
Cashflow per share15.55p
Cash per share34.16p

*Correct as at 23 May 2014

Development Securities

Jeremy Whitley, head of UK and European equities at Aberdeen Asset Management, has topped up his holding in the company that is redeveloping Shepherd’s Bush Market.

Through the £284 million Aberdeen Property Share fund that he and his team manage, Whitley bought another 1.4 million shares in Development Securities (DSC) – worth around £3.4 million. That means the fund now owns 12% of the real-estate firm.

Among other assets, Development Securities has recently secured £38.1 million of funding to develop a shopping centre in Abbey Wood and £44.1 million for the rejuvenation of Shepherd’s Bush Market.

‘These projects were acquired by us in a state of obsolescence or dereliction and benefited from subsequent planning permission to facilitate the delivery of these mixed-use regeneration schemes,’ commented chief executive Michael Marx. Over the past year shares in Development Securities have surged from £1.75 to £2.35.

The Aberdeen Property Share fund invests primarily in UK property companies, and over the past three years has returned an annualised 15% compared with 14.4% from its benchmark FTSE 350 Real Estate index.

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Key stats
Market capitalisation£699m
No. of shares out463m
No. of shares floating310m
No. of common shareholdersnot stated
No. of employees1205
Trading volume (10 day avg.)0m
Turnover£37m
Profit before tax£0m
Earnings per share0.06p
Cashflow per share0.23p
Cash per share0.18p

*Correct as at 23 May 2014

Pittards

Activist investor and entrepreneur Peter Gyllenhammar has cut his investment in long-term holding leather-goods maker Pittards (PTD), as it warned that profit for the first half would disappoint.

Gyllenhammar reduced his holding in the company from 1.31 million shares to 1.26 million or 13.7% worth £1.9 million at a share price of 147p, up 37% over one year.

The former analyst and corporate adviser seeks out businesses which he believes are trading at a substantial discount to net asset value, often seeking board membership.

The investor took a 65% stake in the business in the middle of the last decade for just £2 million as it struggled to restructure pension liabilities. Founded in 1826, Pittards supplies specialist and high-performance leathers for sports, fashion, military and industrial purposes.

Broker WH Ireland earlier this month cut its price target on Pittards from 270p to 220p, rated buy, after the company said first half results would be hurt by the strength of the pound.

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Key stats
Market capitalisation£122m
No. of shares out23m
No. of shares floating15m
No. of common shareholdersnot stated
No. of employees67
Trading volume (10 day avg.)0m
Turnover4m USD
Profit before tax-5m USD
Earnings per share-0.29 USD
Cashflow per share-0.21 USD
Cash per share0.40 USD

*Correct as at 23 May 2014

WANDisco

Citywire AA-rated UK small cap star Paul Marriage has upped his stake in big data business WANdisco (WAND) as its share price plummets.

Marriage upped his holding in the company from 2.1 million shares to 3.6 million or 15.04% worth £18.2 million at a share price of 510p.

The shares are held in his £1.3 billion Schroder UK Dynamic Smaller Companies and £438 million Schroder Absolute UK Dynamic funds. A minority stake is held by AAA-rated colleague Julie Dean.

Data warehousing and analysis business WANdisco saw its share price rise 665% between listing in 2012 and end 2013. An initial moderation turned into a plunge with the wider tech sell-off in March.

While the aggressively expansionary Sheffield start-up continues to lose money hand-over-fist, the company reported a 33% increase in revenue last year to £4.8 million with new business up 86%.

UBS has the company rated as a buy with a price target of £15.35 while Panmure has the company at £15.39, also rated buy.

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Key stats
Market capitalisation£296m
No. of shares out19m
No. of shares floating14m
No. of common shareholdersnot stated
No. of employeesnot stated
Trading volume (10 day avg.)0m
Turnover£101m
Profit before tax£18m
Earnings per share95.05p
Cashflow per share110.20p
Cash per share26.30p

*Correct as at 23 May 2014

XP Power

Harry Nimmo, one of the UK’s most-followed small and mid-cap managers, has upped his investment in specialist electrical power conversion and management business XP Power (XPP).

Nimmo increased his holding in the business from 1.7 million shares to 1.77 million or 9.21% worth £27.3 million at a share price of £15.40, up 25.5% over one year.

The stake is held in his £1.4 billion Standard Life UK Smaller Companies fund, the largest shareholder in the company after founder and current deputy chair James Peters.

Investec last month cut its price target from £18.75 to £17.90, rated buy, after the company reported a 7% increase in group revenues over the first quarter of 2014.

Since the end of 2012 the company has paid down its net debt from £10.6 million to £1.6 million.

The company reiterated its full-year guidance saying an improved ‘trading environment first reported during the second half of 2013 has continued into the new financial year’.

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