Energy firms feel heat as directors cash in

DIRECTORS of oil, gas and mining companies are selling shares at the fastest rate for the past year in a fresh sign the stock market energy boom may be losing its spark.

In the past month, executives have cashed in more than £16m of stock and bought just £307,000.

The FTSE oil and gas sector hit its highest point for three years in March but has fallen 7.5% in the past three weeks. The FTSE mining index has dropped 13% in a month.

Andy Yates, director of financial information firm Digital Look, a partner of This is Money, said: 'Oil, gas and mining stocks have had a storming run on the back of rising commodity prices, but huge director sells suggest the bubble may be bursting.

'Investors should always watch what directors do, rather than what they say.'

On Wednesday, the top four directors at Cairn Energy sold £8m of shares, with chief executive Bill Gammell netting £1.2m.

In the first quarter to end-March, directors in the three natural resource sectors sold £16m of stock, double the amount they bought.

Few in the City would begrudge the sell-off, given the bumper returns many institutions have made from the success of Cairn and the rising oil price. Cairn's shares soared 362% in three years.

But with the slew of new issues on Aim in recent months, some experts feel the market is due a correction, particularly among speculative exploration plays with little in the way of tangible assets.

Talk about what's hot and what's not in the oil and mining sector on our Talking Point message board.