Big director share buys at Quindell puts the cat amongst the pigeons

After a prolonged period of steep share price falls for Quindell, the telematics and legal services group, it was interesting to see an announcement this afternoon that the directors of the company were buying the shares heavily sending the price up 6% or so to 133p. Positive trading updates have been largely ignored by the market with initial buying on financial updates followed by days of heavy selling moving the shares down to all time lows. The latest news follows director buys by Robert Bright (100,000 at 131p) and Tim Scurry (15,000 at 141p) on the 31st October and 29th October, respectively.

Rob Terry, Laurence Moorse and Steve Scott today purchased a total of 1,575,000 ordinary shares with Terry the Chairman picking up a million shares. The funding mechanism involves Equities First Holding LLC which may result in the transfer of up to 51,959,658 Ordinary Shares as security with the company prohibited from shorting or lending out the shares.  The Purchasing Directors are each required to redeem the transferred shares at maturity when the loan is repaid. Terry said that “As demonstrated by the purchases made by some of the board today and recently by other members of the board and executive team, we believe the current market valuation of the Company is materially below its true value. The board remains confident of meeting full year market expectations and of the Company’s longer term prospects. We are pleased that we have been able to secure funding to allow us to take advantage of this buying opportunity and to make these initial significant purchases of stock at these levels.”

The statement by Rob Terry clearly says initial stock purchases which suggests further buys may be on their way but the RNS fails to say exactly how much was borrowed by the directors. Certainly any further firepower to buy shares could make the job of the shorters a little harder. With the shares dropping as low as 121p this morning helped by a very weak AIM market, a turnaround was likely at some point. The scale of the buys certainly grab the attention anyway! The directors and shorters seem to be full battle following this news but Rob Terry will need to pull further rabbits out of the hat that’s for sure particularly when it comes to new deals after the disappointment of the RAC JV breakdown.

Contrarian Investor UK

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