RE: Technical trading24 Mar 2022 08:25
Gum T. It seems obvious to say it, but you may have missed the point so it's worth saying again, but director purchases don't move the share price because they purchase significant amounts. Director purchases move the share price because it's a clear signal to other investors that those on the inside of the business see the company's shares as a worthwhile investment.
Some director purchases seem made to bolster a flagging share price, or a token effort from board members. A recent NFX round of fund-raising saw a director make a sole pruchase of £5k. This to me seemed more of an insult than a genuine expression of faith in the company's prospects.
In contrast, Michael Tobin's purchases have been both large and frequent. Go to the LSE page for any other company and click on the Director Deals icon near the top of the page. Now do the same for BOOM, and compare them.
Add up the amount of times Tobin has purchased within the past 12 months, for example, and add up the amount of shares he has bought, and add up the total amount he has paid for those shares. He has bought a significant number of them on the open market, paying full market price. Make a note of the share price he has paid for those shares.
It is a good sign for private investors when board members of a company have skin in the game, because they are investing in the company and not just drawing a salary. Many investors, myself included, look for director purchases as a key indicator of whether to invest in a company.
What Michael Tobin is doing at BOOM isn't purchasing a token amount in a fundraising, he isn't bolstering a flagging share price. He is buying more shares more often than I have ever seen before, at near all-time highs. He has such a significant stake in the company already that he doesn't need to buy more to reassure investors.
Tobin knows the company's prospects better than us PIs. He is privy to real-time data and doesn't have to rely on backward-looking RNS'd financial reports.
The only reason he is buying these amounts of shares is because he sees this as a money-making opportunity of a lifetime. He sees significant upside to the share price, in the near to medium term. There is no other reason for him to tie-up so much of his personal wealth in the company unless he expects to get back a lot more.
My average here is £7. I topsliced some at £21-£22, but I have bought the shares all back in the past week. I am stunned that more people can't see it.
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