ABF non-executives seize buying opportunity
Dr Wolfhart Hanser, non executive director of food-to fashion conglomerate Associated British Foods (ABF), bought 3,243 shares at a price of £15.34 on 5 July.
This followed an earlier transaction on 29 June by another non-executive director, Emma Adamo, who acquired 45,000 shares at a price of £16.36 for a total value of £736,200.
Associated British Foods shares have fallen 24% since the start of the year and by 8% over the last month alone.
This is despite recent news that Primark, owned by the group, will launch a UK click-and-collect trial on children’s products towards the end of the calendar year in what looks a useful 'halfway house' between in-store and online retail.
Chief executive George Weston told analysts click-and-collect represents a ‘significant business opportunity’ for Primark.
The trial, which will take place in up to 25 stores in the North West, will allow cash-strapped shoppers to order children’s goods online at their convenience, but they will still need to pop into a Primark to collect their purchase which management hopes will boost footfall and could lead to extra in-store sales.
‘It means people can shop at their convenience at home but will still come through the doors of a Primark to collect their purchase and potentially make some incremental buys along the way' said Russ Mould, investment director at AJ Bell.
Supermarket Income REIT chair adds to basket
Nick Newson, chairman of real estate investment trust Supermarket Income (SUPR), scooped up 425,000 shares at a price of 117.47p on 5 July for a total layout of just under £500,000.
On the same day, non-executive director Catherine Vanderspar bought 16,907 shares at a price of 118.29.
Non-executive directors Vincent Prior and Jonathan Austen also bought 17,037 and 25,560 shares at 117.39p and 117.79p respectively on 4 July.
First half results at the beginning of March demonstrated a strong operating performance and continued deployment of capital into attractive supermarket assets.
The group acquired a total of £327 million assets at a yield of 4.6%, adding 28.5% to contracted rent.
At the first half, Supermarket Income REIT had cash and debt facilities of £247 million enabling further portfolio expansion.
However, broker Peel Hunt recently downgraded the stock from Hold to Reduce arguing the premium to NAV (net asset value) was unjustified.
The group has a debt book exposed to higher rates. with just 44% of existing drawn debt hedged.
Peel Hunt believes current rates could reduce earnings per share by 8%, and hedging now for five years would lead to a 20% earnings downgrade.
An additional concern relates to the substantial equity raise conducted earlier this year.
Future debt drawdown and the sale of its jointly-owned assets to Sainsbury’s (SBRY) could generate firepower of around £700m for new acquisitions.
Yet Peel Hunt warns that with yields compressing and a dividend to support, the investment trust may need to sacrifice further on asset quality.
Investor Waverton Investment Management recently reduced its holding in the group.
Over the last five days shares have jumped 7%, but on a six-month view they are down 0.4%.
DISCLAIMER: AJ Bell owns Shares magazine. The editor of this story (Ian Conway) own shares in AJ Bell.
