Computacenter Director Purchases

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1st Jul '15 by Michael_P

4 comments 8820 reads

I have been holding Computacenter CCC for about six months and during that time it has made significant cash returns to investors through a reverse split and dividends. In the last week there have been 4 separate director purchases. It has a StockRank of 99 and is very close to 52 week highs. Just wondering what people's views are as to what can be read into the director purchases?

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About the Author

Michael_P

Premium Member

4 comments

WarrantStar

1st Jul '15

Well 4 directors buying and a stock rank of 99 does look interesting.
But revenue and EPS forecasts don't look like anything special.
What was the scale of director buying?
It's got good momentum with a rank of 91, but I can't see why at first glance.
Is there something about Computacenter that you particularly like?

underscored

1st Jul '15

EPS forecasts - how often are they right?

Michael_P

1st Jul '15

As I said I've been long this stock 6 months. From the original investment the shares have appreciated just under 12% and there have been divis (including a special) totalling just under 14% of my original investment. I believe that the special dividend was funded primarily through the sale of a non-core business. This could account for EPS projections being slightly lower than 2014 EPS. I guess the reverse split was intended to counteract that to a degree.

A fifth director purchase was announced today on RNS. The non-exec Chairman bought 41,500 shares yesterday at 768.8p. That comes to around £320k. The other four purchases came to a total of around £270k. He was one of the four who had already bought in the four purchases in the last week.

The original owners who brought Computacenter (LON:CCC) to market in 1998 still seem to hold well over 15% between them. They are both NED's. The stock has shown consistent EPS and dividend growth over the last 5 years and has a Piotrowski F-score of 8. Since there is a strong overlap of ownership and management I think there is reason to be optimistic that this business will continue to be strongly cash generative, and that some of that cash will be distributed to shareholders.

I agree that the projected growth could be higher but one could argue that if it was, the share price would be as well. I guess no one share can have everything that you could possibly want in an ideal share. I guess that is why having a portfolio is important.

There are some headwinds as it has operations in France and Germany and in the uncertainty over the Eurozone and with the Euro weaker against the pound this could impact earnings.

Also, what I am trying to work out from the flurry of RNS announcements is whether these purchases are part of some sort of executive incentive or bonus scheme. I can't see anything to suggest that they are, but wanted to get other people's insight.

Rusty2

1st Jul '15

Generally its a good sign but not always, see QPP for example. In this case can't see any problem but diectors do not always get it right, I followed a few directors buys and the shares fell quite a bit afterwards, Dialight (LON:DIA) was one and Alent (LON:ALNT) was the other. Here is a post: http://www.stockopedia.com/content/the-insiders-guide-to-directors-dealings-77163/

Re Computacenter (LON:CCC) can't see anything to get excited about, trading statements and forecasts seem fairly flat. Yes they did sell off part of the company thats why the revenue was down slightly.

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Computacenter Director Purchases

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Michael_P

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