When directors buy shares in their own firm, it is invariably a good sign.
On April 9 and 10, nine directors at AZ Electronic Materials bought stock in the company.
Three, including the chairman and chief executive, each spent more than £100,000 on shares while the others spent between £10,000 and £40,000 apiece.
Specialiist: AZ makes chemical products used in smartphones, tablets and other electronic gadgets
Their timing was noteworthy. On the morning of April 9, AZ said that revenues in the first quarter of the year were lower than expected and that margins for 2013 would be lower than usual.
Market reaction was savage and the shares fell 34 per cent in a single day to 240p – at which point the directors stepped in.
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AZ makes specialised chemical products used in smartphones, tablets and other electronic gadgets, but it has been hit by increasing competition and a slowdown in the flatscreen industry in the second half of 2012.
Most analysts believe that these setbacks are temporary and suggest the shares should rise in the coming months.
Midas verdict: Midas recommended AZ in October 2011 at 251 1⁄2p. Today, the shares are 290p so investors have made money.
However, there is more potential at current levels, even after the profit warning, and the directors’ purchases inspire confidence. The shares are a strong hold.