THE CURIOUS ABSENCE OF DIRECTORS DEALING CASE 2! THIS TIME IN LONDON CAPITAL GROUP

Regular readers will be aware that I wrote about Blinkx recently and opined that as the stock price has fallen away further in recent weeks from the last shot of Director’s buying, that the absence of renewed purchasing by the Board, even in the face of reassuring noises from management about their business was curious. Time will tell on that one as to whether this is due to their being “restricted” or whether the stock has another lurch lower to come.

Another stock that we have also covered here is London Capital Group the spread betting and CFD company. It is fair to say that this has been a classic value trap over the last 2 years. The negative enterprise value has enticed me personally into the stock and I have watched, aghast as the company has continued to flail following the departure of Simon Denham as CEO last year. Shortly after Mr Denham’s departure there was an ill-fated tenure as CEO by Mark Slade and who, to give him his dues, actually initially showed his faith in his ability to turn the ship around through purchasing a couple of decent tranches of the stock.

A rather youthful looking Mr Vardey!

Slade however made a swift exit and one Mr Kevin Ashby was wheeled in. At this stage, it is worth pointing out that serial non exec Giles Vardey has been Chairman for the last 2 years and again, regular readers of this site will be aware that he presided over a monumental destruction of value at Plus Markets. Note to oneself – in future, if Mr Vardey is in situ as a Non Exec, do NOT get involved!

Mr Charles Henri Sabet by his trading screens!

What is curious with LCG however is that the deal with Mr Henri-Sabet, who has effectively pulled off a “take under” of the company by way of his convertible loan injection and where he had to buy votes of Artemis and Mr Denham through committing to buy stock of them at 35p to get the convertible loan proposal through (many other shareholders would have no doubt liked this offer…) is just why Messrs Ashby and Vardey have not put their hands in their pockets and shown their faith?

Mr Ashby, seemingly trying to get a point across!!

I met with Mr Ashby in mid-summer and made clear my own concerns over the deal. Needless to say Mr Ashby was at pains to try assuage me that the deal is in the interests of ALL shareholders and what a jolly good chap Mr Henri-Sabet is and how he is looking to create a financial powerhouse. All hunky dory I’m sure. The jury’s out on this deal and only time will tell if it is to be a success but I left Ashby clear in no uncertain terms that “talk is cheap” and that he and Mr Vardey should send a message loud and clear to his long suffering shareholders that this deal has a chance of restoring value and at the very least getting the stock back to a positive enterprise value!

Mr Ashby, your shareholders are waiting for you to show your confidence in this deal and buy some stock from your not inconsiderable salary.

CLEAR DISCLOSURE – Richard Jennings and Titan funds have exposure to London Capital Group shares.