Director dealings: Marks and Spencer, Cranswick, HomeServe

John Choong — Sat, 02 Jul 2022 07:00:17 +0000

Director dealings are essentially insider transactions for shares between directors and the companies they work for. These dealings are always made public, and are often considered a good indicator of a company’s future prospects. However, they don’t get nearly as much attention as other company news due to their complex nature. Nonetheless, here I’m breaking down this week’s biggest director dealings from three FTSE firms.

Marks and Spencer

Marks and Spencer (LSE: MKS) is a major British multinational retailer that sells clothing and beauty, home, and food products. This week, three director dealings were carried out. A large number of shares were received in lieu of a cash dividend, but a portion was sold to cover tax and national insurance obligations.

Name: Stuart Machin
Position of director: Chief Executive Officer
Nature of transaction: Free shares
Date of transaction: 22 June 2022
Amount received: 203,120 @ nil
Total value: N/A

Name: Stuart Machin
Position of director: Chief Executive Officer
Nature of transaction: Sales of shares to cover tax and national insurance liabilities
Date of transaction: 22 June 2022
Amount sold: 99,121 @ Â£1.37
Total value: Â£135,805.68

Name: Sacha Berendji
Position of director: Property, Store Development, and IT Director
Nature of transaction: Free shares
Date of transaction: 22 June 2022
Amount received: 138,115 @ nil
Total value: N/A

Name: Sacha Berendji
Position of director: Property, Store Development, and IT Director
Nature of transaction: Sales of shares to cover tax and national insurance liabilities
Date of transaction: 22 June 2022
Amount sold: 67,399 @ Â£1.37
Total value: Â£92,343.37

Name: Paul Friston
Position of director: International Director
Nature of transaction: Free shares
Date of transaction: 22 June 2022
Amount received: 131,691 @ nil
Total value: N/A

Name: Paul Friston
Position of director: International Director
Nature of transaction: Sales of shares to cover tax and national insurance liabilities
Date of transaction: 22 June 2022
Amount sold: 62,264 @ Â£1.37
Total value: Â£88,048.11

Cranswick

Cranswick (LSE: CWK) is a leading UK food producer and supplier of fresh and premium food products. It’s most famous for its meat products. Four directors opted to exercise their share options this week. However, they then proceeded to sell portions.

Name: Mark Bottomley
Position of director: Chief Financial Officer
Nature of transaction: Free shares
Date of transaction: 27 June 2022
Amount received: 31,800 @ nil
Total value: N/A

Name: Mark Bottomley
Position of director: Chief Financial Officer
Nature of transaction: Sale of shares
Date of transaction: 27 June 2022
Amount sold: 16,379 @ Â£30.82
Total value: Â£504,768.02

Name: Adam Couch
Position of director: Chief Executive Officer
Nature of transaction: Free shares
Date of transaction: 27 June 2022
Amount received: 48,100 @ nil
Total value: N/A

Name: Adam Couch
Position of director: Chief Executive Officer
Nature of transaction: Sale of shares
Date of transaction: 27 June 2022
Amount sold: 24,775 @ Â£30.82
Total value: Â£763,515.95

Name: Jim Brisby
Position of director: Chief Commercial Officer
Nature of transaction: Free shares
Date of transaction: 27 June 2022
Amount received: 31,800 @ nil
Total value: N/A

Name: Jim Brisby
Position of director: Chief Commercial Officer
Nature of transaction: Sale of shares
Date of transaction: 27 June 2022
Amount sold: 16,379 @ Â£30.82
Total value: Â£504,768.02

Name: Chris Aldersley
Position of director: Chief Operating Officer
Nature of transaction: Free shares
Date of transaction: 27 June 2022
Amount received: 26,300 @ nil
Total value: N/A

Name: Chris Aldersley
Position of director: Chief Operating Officer
Nature of transaction: Sale of shares
Date of transaction: 27 June 2022
Amount sold: 13,546 @ Â£30.82
Total value: Â£417,460.628

HomeServe

HomeServe (LSE: HSV) offers low-cost home warranty and home repair options. It markets itself as the solution to expensive and inconvenient emergency home repairs. Three massive director dealings happened earlier in the week, as shares were awarded to these directors based on performance conditions.

Name: David Bower
Position of director: Director
Nature of transaction: Free shares
Date of transaction: 27 June 2022
Amount received: 21,119 @ nil
Total value: N/A

Name: David Bower
Position of director: Director
Nature of transaction: Free shares
Date of transaction: 27 June 2022
Amount received: 10,190 @ Â£11.69
Total value: Â£119,121.10

Name: Tom Rusin
Position of director: Director
Nature of transaction: Free shares
Date of transaction: 27 June 2022
Amount received: 30,619 @ nil
Total value: N/A

Name: Tom Rusin
Position of director: Director
Nature of transaction: Free shares
Date of transaction: 27 June 2022
Amount received: 11,815 @ Â£11.69
Total value: Â£138,117.35

Name: Richard Harpin
Position of director: Director
Nature of transaction: Free shares
Date of transaction: 27 June 2022
Amount received: 34,911 @ nil
Total value: N/A

Types of shares in a SIP

To provide context, there are a few types of shares within a company’s share incentive plan (SIP). A SIP is an employee plan for companies within the UK to flexibly award equity to employees. Publicly listed companies normally exercise this option because itâs tax-efficient for both the employer and its employees.

Types of shares within a SIP (Source: BDO.co.uk)

In this instance, all the director dealings above occurred with free shares. These shares were acquired by directors under their companies’ share plans. These were either a restricted share plan (Marks and Spencer), or incentive plans (Cranswick and HomeServe).

Share award schemes give employees actual shares rather than share options. The value of shares given to directors here is treated as employment income. This means that it may be subject to tax and national insurance contributions. That is unless the directors opt for an HMRC-approved share scheme, which has its own rules and requirements. Incentive plans give directors shares when they hit certain performance targets. For HomeServe directors, the awards were subject to the company’s earnings per share.

The post Director dealings: Marks and Spencer, Cranswick, HomeServe appeared first on The Twelfth Magpie.

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John Choong has no position in any of the shares mentioned. The Motley Fool UK has recommended Tesco. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Should I buy Marks and Spencer shares for its growth in July?

John Choong — Fri, 01 Jul 2022 11:30:27 +0000

Marks and Spencer (LSE: MKS) shares are down 40% this year. Despite that, the retailer reported excellent numbers in its most recent full-year results, with plenty of promise for the future. As such, I think a closer look at the company is warranted.

Hungry for more

After years of declining profit margins, Marks and Spencer launched its latest turnaround programme in 2020 under the Never the Same Again name. This bid to improve the brand’s image and business operations looks like it might be working. The FTSE 250 firm has posted an excellent recovery since, with improvements in customer perception of the M&S brand. As a result, M&S Food sales grew 10.8% year-on-year, while expanding its market share from 3.4% to 3.6% over a three-year period. This was also helped in part by its key partnerships with Coca-Cola‘s Costa Coffee and Ocado.

Additionally, the firm saw its operating margins improve in the second half of its financial year. Even so, I was impressed that the board is aiming to further improve its food supply chain through boosting efficiency and cutting costs. Thus, I expect its food prices to become more affordable, allowing it to expand its market share.

Getting the right fit

Marks and Spencer isn’t just its food business, however. One of the main reasons behind its poor past performance can be attributed to the company’s inability to keep up with the times, as far as its struggling clothing offer was concerned.

That being said, the Never the Same Again programme gave a breath of fresh air to the retailer’s clothing segment. Consequently, the division saw its sales figure jump 51.6% on the year and 3.8% against three years ago.

There’s also the positive effect of M&S’s investments in digital. With heavy competition from e-commerce giants and more nimble omnichannel retailers, Marks and Spencer was always going to struggle. However, enhanced investment has made its e-sales more market competitive. In fact, market penetration has almost doubled to 34%. This has been helped by around its 40 clothing brand partnerships. Moreover, the acquisition of Jaeger and The Sports Edit have added even more depth and variety to its offer.

A summer with Marks and Spencer

Since 2018, Marks and Spencer has reduced its debt levels by 12%. What impressed me most though, is its cash position, which has grown by a whopping 455%! Furthermore, profit margins are back to a healthier level of 2.8%, with free cash flow at Â£1.1bn.

Source: Marks and Spencer Investor Relations

Nevertheless, my concerns of a potential recession impacting sales are shared by the board. Having said that, CEO Stuart Machin stated that its market positioning and business strategy will help mitigate any slowdown. He believes that the company has a strong brand image to help it maintain its market share. He also expects strong tailwinds from travel, leisure, and weddings to keep its sales numbers strong.

Marks and Spencer shares have a price-to-earnings (P/E) ratio of 9. While it’s not seen as a traditional growth stock, it does have an average price target of Â£1.93. This gives it the potential to rebound by 43% over a one-year period. Therefore, I’ll be capitalising on its low share price and will buy some stock for my portfolio in July.

The post Should I buy Marks and Spencer shares for its growth in July? appeared first on The Twelfth Magpie.