Directors Have Bought Big at National Grid, RSA Insurance Group, and Petrofac

LONDON -- The FTSE 100 index is up 12% since the start of the year and up 30% (over 1,250 points) on its 52-week low.

Nevertheless, directors at National Grid  (LSE: NG  ) (NYSE: NGG  ) , RSA Insurance Group (LSE: RSA  ) and Petrofac Limited  (LSE: PFC  ) have been buying shares in their own companies in today's high-flying market.

National Grid
Utilities were out of favor with the market last week. Sir Peter Gershon, chairman of FTSE 100 heavyweight National Grid, took advantage to almost double his stake in the company.

Gershon splashed out just over £150,000 on 18,800 shares at 798 pence a share, taking his total interest to 60,286 shares. The company declared a 26.36 pence dividend when releasing its annual results two weeks ago, so Gershon is in line for a personal dividend payout of £15,891.

National Grid's shares are currently trading at 774 pence, and investors who buy before the market closes on Tuesday will still be entitled to the 26.36 pence a share dividend. Add 14.49 pence a share, which the company intends to pay for the next interim dividend, and you have a 5.3% income. The directors are aiming to increase the dividend "at least in line with the rate of RPI inflation each year for the foreseeable future".

RSA Insurance
RSA Insurance reported an "encouraging" start to 2013 last month, and two directors -- or their spouses, to be totally accurate -- purchased shares at a bit under 111 pence to the combined tune of £233,000.

The wife of chief executive Simon Lee bought 139,510 shares at a cost of £154,000; and the wife of finance director Richard Houghton bought 71,000 shares, leaving her purse £79,000 lighter.

RSA's shares are trading a little higher today at 114 pence, but remain on a modest rating of less than 10 times current-year-forecasted earnings. Furthermore, despite upsetting the market back in February by cutting its final dividend by a third -- and indicating that the next interim would be reduced by the same order -- RSA continues to offer a high yield: 5.4%.

The shares of oil and gas services company Petrofac have gone off the boil lately, currently trading more than 20% below their highs of January. Analysts expect the company's previous stellar earnings growth to be more moderate this year before picking up again in 2014.

Petrofac's finance director, Tim Weller, and the wife of company chairman Norman Murray both took advantage of the weakness in the shares a couple of weeks ago by investing £100,000 each. Weller paid 1,341 pence for his shares; Mrs Murray paid 1,333 pence for hers.

The shares are currently trading at the same price Weller paid, which equates to 10.6 times forecast 2013 earnings, falling to nine times 2014 forecasts. Analyst expectations for the dividend -- which Petrofac hiked 17% last year -- imply a yield of 3.3% on 2013 estimates and 3.8% on estimates for 2014.

Shrewd investors
I can't tell you whether all these directors have made shrewd purchases at the prices they've paid. But I can tell you that the Motley Fool's top analysts have declared one of the three companies as the Fool's top income share for 2013.

You can help yourself to this free in-depth report explaining why our analysts believe the income from this company will grow strongly for years to come -- and why the shares are currently 10% below their fair value.

This exclusive free report can be in your inbox in seconds -- simply click here.


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Related Tickers

9/28/2016 12:13 PM
NG $1095.50 Up +2.00 +0.18%
National Grid CAPS Rating: No stars
NGG $71.87 Up +0.38 +0.53%
National Grid CAPS Rating: ****
PFC $837.20 Up +21.70 +2.66%
Petrofac CAPS Rating: No stars
RSA $549.50 Up +2.50 +0.46%
RSA Insurance Grou… CAPS Rating: No stars