Directors have been buying big-time at Royal Bank of Scotland (LSE: RBS), Ashtead (LSE: AHT) and Capital & Counties Properties (LSE: CAPC). Should you follow their lead, and load up on shares of these three companies?
Royal Bank of Scotland
RBS’s results at the end of last week disappointed the market, with the shares falling 7% on the day. The bank said it achieved its 2015 targets. However, the outlook for resolving legacy issues remains as cloudy as ever, and the prospect of a resumption of dividends has been pushed further out.
The market had been hoping RBS would declare a final dividend with its 2016 results in February next year. But the company said the divestment of Williams & Glynn — a precursor to restarting payouts — won’t now be achieved until after that date.
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Despite the continuing uncertainties and the dividend receding over the horizon once again, RBS’s key directors splashed out almost £1m buying shares on Monday, as detailed in the table below.
| Name | No. of shares | Price per share | Total investment |
| Howard Davies (chairman) | 40,000 | 222.1p | £88,840 |
| Ross McEwan (chief executive) | 200,000 | 223.0p | £446,000 |
| Ewen Stevenson (chief financial officer) | 200,000 | 223.2p | £446,400 |
The directors were buying at little more than 10 times forecast 2016 earnings and at a 37% discount to tangible net asset value (TNAV). The shares are a little higher today, but there’s still a wide margin of safety to cover potential earnings downgrades and a reduced TNAV as legacy issues and restructuring play out.
Ashtead
Ashtead is another FTSE 100 company whose shares fell heavily on the release of recent results. The construction and industrial equipment rental firm ended the day down 9% after announcing Q3 results on Tuesday.
The board went in mob-handed to buy shares, the volatility in the day’s trading being reflected in the wide range of prices the individual directors paid, as you can see in the table below.
| Name | No. of shares | Price per share | Total investment |
| Chris Cole (chairman) | 3,000 | 845p | £25,350 |
| Geoff Drabble (chief executive) | 30,862 | 804p | £248,130 |
| Ian Sutcliffe (non-exec) | 12,250 | 810p | £99,225 |
| Michael Burrow (non-exec) | 2,500 | 793p | £19,825 |
Ashtead’s shares have recovered to near 900p, but still look cheap. They trade on a modest 11.3 times expected earnings for the financial year ending 31 March, falling to just 9.5 times forecasts for the year ahead. A price-to-earnings growth ratio of 0.5 also suggests the shares remain good value.
Capital & Counties Properties
London-focused property company Capital & Counties also got a thumbs down from the market on the day of its results. The FTSE 250 firm saw its shares marked down 8% when it released its annual numbers last week.
Again, the directors showed confidence in their own company, immediately wading in en masse to buy shares, as detailed below.
| Name | No. of shares | Price per share | Total investment |
| Ian Hawksworth (chief executive) | 50,000 | 319.46p | £159,730 |
| Souemen Das (chief financial officer) | 30,000 | 322.80p | £96,840 |
| Gary Yardley (chief investment officer) | 30,000 | 319.46p | £95,838 |
| Gerry Murphy (non-exec) | 30,000 | 332.30p | £99,690 |
The shares of Capital & Counties, whose prime assets include the Covent Garden central plaza, are trading at 326p as I write, which looks reasonably appealing, being a 10% discount to EPRA adjusted net asset value.
