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5 shares the pros are buying and selling

Our regular roundup of trades by professional investors, featuring buys from small cap stock pickers Neil Hermon and Gervais Williams.

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Key stats
Dividend yield 0%
Market capitalisation £259m
No. of shares out 140m
No. of shares floating 92m
No. of employees 465
Trading volume (10 day avg.) 0.9m
Turnover £64m
Profit before tax £32m
Earnings per share -1.76p
Cashflow per share 17.88p
Cash per share 6.53p

Codemasters (CDM)

Who’s trading? Citywire A-rated Neil Hermon

The trade: Janus Henderson’s director of UK equities and manager of the UK Smaller Companies fund has upped his stake in video game developer Codemasters Group to over 5% of the shares.

How have the shares performed? Codemasters began trading on AIM in May and has seen its share price decline from a high of 275p to a low of 133p at the end of last month. On Friday the shares were changing hands at 185p.

What does the company say? Earlier in October the company, which specialises in racing games, updated the market on its half-year performance, revealing that it generated revenue of £39.7 million in the six months to 30 September. Meanwhile digital sales grew to 53% of total revenues, resulting in a gross margin of 88.5%.

What’s the outlook? Analysts at Liberum set a target price of 310p for the company, which has been given a 'buy' rating. Liberum noted with a price-earnings ratio of 16 times and trading on three times revenues, the business looks cheap compared to the UK technology sector and global peers. After a strong set of first-half results full-year numbers are anticipated to be in-line with expectations.

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Key stats
Dividend yield 3.1%
Market capitalisation £711m
No. of shares out 30m
No. of shares floating 7m
No. of employees 1,079
Trading volume (10 day avg.) 0m
Turnover £238m
Profit before tax £36m
Earnings per share 89.76p
Cashflow per share 105.42p
Cash per share 865.12p

Clarkson (CKN)

Who’s trading? Montanaro Asset Management

The trade: The funds boutique founded by veteran small-cap stock picker Charles Montanaro has cut its interest in 166-year-old shipping broker Clarkson from 3% to 2.2% of the shares, worth around £7 million.

How have the shares performed? Clarkson’s share price is trading at £24, some way beneath its £52-week high of £34.75, due in part to growing concerns over a US/China trade war. Its first-half numbers showed a dip in revenue from £156.8 million to £152.6 million, while pretax profit fell from £21.9 million to £18 million.  

What does the company say? Clarkson said the first quarter presented a challenging trading environment across the shipping and offshore capital markets, including a quiet period in sale and purchase, which was accentuated by a fall in the value of the US dollar. Chief executive Andi Case did note though that ‘conditions in some markets did, however, improve in the second quarter when the breadth and diversity of our business again provided opportunity irrespective of volatility in the market.’ 

What’s the outlook? Despite the challenges faced in the first half, the firm said in August it was encouraged by the recent improved trading conditions and the more favourable US dollar exchange rate. ‘We should benefit in the second half of the year from these recent improvements and remain confident in the mid- to long-term potential for the group,’ it forecast.

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Key stats
Dividend yield 0%
Market capitalisation £45m
No. of shares out 43m
No. of shares floating 25m
No. of employees 29
Trading volume (10 day avg.) 0m
Turnover £43m
Profit before tax £m
Earnings per share 4.85p
Cashflow per share 8.24p
Cash per share 9.64p

Aggregated Micro Power Holdings (AMPH)

Who’s trading? Gervais Williams and Martin Turner 

The trade: The Miton fund management duo has disclosed a 6.7% stake in AIM-listed renewables fuel firm Aggregated Micro Power Holdings through their UK Multi Cap Income fund.  With shares in the firm trading at around £1 a piece, the position is worth in the region of £3.5 million.

How have the shares performed? The company is trading around 10% beneath its 52-week high after it delivered strong 2017 numbers at the start of July, showing a surge in revenue from £19.7 million to £43.2 million. Operational profit rose from £1.8 million to £3 million. In October AMPH raised £8.5 million through a placing, the proceeds of which will be used to ‘simplify’ its balance sheet.

What does the company say? AMPH chief executive Richard Burrell said his firm continued to develop at a ‘frenetic’ pace in a statement accompanying the results. This was fuelled in part by two acquisitions. At the same time the group started to address integration and restructuring, streamlining its management team in wood fuels and bringing in service and maintenance expertise to run boiler systems and grid balancing assets.

What’s the outlook? AMPH is forecasting another ‘exceptionally busy’ year. ‘We have a major integration program under way in our wood fuels business following the acquisition of a number of UK wood fuels suppliers over the last two years into the Forest Fuels Group,’ it noted.

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Key stats
Dividend yield 2.7%
Market capitalisation £245m
No. of shares out 14m
No. of shares floating 11m
No. of employees 490
Trading volume (10 day avg.) 0.1m
Turnover £102m
Profit before tax £15m
Earnings per share 35.44p
Cashflow per share 72.41p
Cash per share 231.65p

Brooks Macdonald (BRK)

Who’s trading? Citywire AAA-rated Anthony Cross & Julian Fosh

The trade: The Liontrust UK equities duo reduced their holding in wealth management firm Brooks Macdonald from 20.2% to 19.3% or 2.7 million shares worth £47.7 million at a share price of £17.75

How have the shares performed? The business peaked at £22.40 in January, however it has since seen its share price slide and is now down 9.4% over 12 months.

What does the company say? Last month Brooks Macdonald revealed that it saw a 3% increase in assets under management in the third quarter moving closer to £13 billion, which was attributed to net inflows of £158 million and positive investment performance of £211 million. This has been achieved despite a number of headwinds including increased spending on regulation and new systems. 

What’s the outlook? The wealth management sector has been through a challenging period as markets wobbled in October, however Brooks has continued to deliver organic growth. Analysts at Peel Hunt reiterated their 'buy' recommendation and set a price target of £21.50. Return to growth is expected in 2019 following a number of investments into the business this year.

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Key stats
Dividend yield 0%
Market capitalisation £43m
No. of shares out 34m
No. of shares floating 21m
No. of employees 115
Trading volume (10 day avg.) 0m
Turnover £18m
Profit before tax £2m
Earnings per share 4.30p
Cashflow per share 5.73p
Cash per share 4.21p

Pennant International Group (PNIG)

Who’s trading: Judith Mackenzie

The trade: The manager of the MI Downing UK Micro Cap Growth fund has reduced her stake in software company Pennant International Group from 5.7% to 4.8% of the shares. The 1.6 million shares she has in the business are worth just over £2 million. 

How have the shares performed: Pennant International’s shares have been on a steady climb, rising 56% over one year to its current price of 128p.

What does the company say? The training and support solutions provider has recently struck a two-year deal with the Canadian government that’s worth CAD 11.9 million. In the first half of the year the company recorded a pre-tax profit of £2 million, up 37%.

What’s the outlook? The business, which has a price-earnings ratio of 18.4, is continuing to invest in product development and its infrastructure. Chairman Simon Moore said the board anticipated trading would be in line with market expectations for the year.

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