Buy to sell ratios are at their highest levels since December 2009, says Omam’s Simon Murphy.
A 11:1 ratio of director buying to selling is a clear sign that companies are “backing up their convictions with their own shares”, according to Murphy.
This is at a time when cash reserves among corporations are considered to be at comparatively high levels. Murphy predicts there will be a resumption of the heightened levels of merger and acquisition activity seen earlier this year as “it is natural that the corporate sector should want to start expanding at a time like this.”
Coupled with an attractively valued equity market, Murphy has boosted the portfolio’s position in some preferred holdings including engineering firm Weir Group and energy support provider Wood Group.
The biggest allocation increase by sector has been in oil services, which now stands at 6 per cent above the FTSE All-Share benchmark.
Oil services are seen by Murphy as well placed to grow in the current climate and describes it as the primary area the portfolio is concentrating on.
It is the support services sector in which the portfolio is most overweight in, relative to the benchmark. Currently comprising 10.4 per cent of the fund, it is 7 per cent overweight.
Murphy is currently choosing to keep the portfolio light on traditionally defensive areas, although exposure to the technology sector remains about 3 per cent overweight.