One of the more commonly used strategies by investors is to follow insider transactions. Some might even assume that since insiders are “in the know”, they might be better equipped to predict the share price of a company. Consistent insider purchases may indicate an undervalued share price. On the other hand, there might be others who would turn the argument around and say that if insiders are selling, then bad news is likely to be around the corner – though it must be noted there is no basis for that as insiders might be selling for their personal…
One of the more commonly used strategies by investors is to follow insider transactions. Some might even assume that since insiders are “in the know”, they might be better equipped to predict the share price of a company.
Consistent insider purchases may indicate an undervalued share price. On the other hand, there might be others who would turn the argument around and say that if insiders are selling, then bad news is likely to be around the corner – though it must be noted there is no basis for that as insiders might be selling for their personal reasons.
With that in mind, let’s take a look at three companies with insider activity over the past week.
First REIT (SGX: AW9U)
First REIT is Singapore’s first healthcare real estate investment trust focusing on a diverse portfolio of yield-accretive healthcare and healthcare-related real-estate assets in Asia. As of 18 February 2014, its property portfolio is currently collectively valued at over S$1 billion and comprises nine hospitals and one hotel & country club in Indonesia, three nursing homes in Singapore and one hospital in South Korea.
On 13 Feb, Mr. Albert Saychuan Cheok, independent director and chairman of the board, bought 30,000 units at the price of S$1.025 per unit. Likewise, Mr. Ronnie Tan Keh Poo, chief executive of the manager of the REIT, was increasing his stakes in the REIT as well. From Jan 28 to Feb 10, a total of 150,000 units were purchased at prices between S$1.01 and S$1.03 per unit. His direct and indirect interests stand at 0.0171% and 1.1082% out of the number of shares outstanding respectively.
First REIT last traded at S$1.04 on Tuesday, a slightly higher price at which Tan and Cheok had acquired their shares. The REIT’s units have a net asset value of $0.966 and offer an annualized distribution yield of 7.2% with an acceptable gearing level of 32.3%.
Roxy-Pacific Holdings (SGX: E8Z)
Roxy-Pacific Holdings is a homegrown specialty property and hospitality group with operations mainly based in Singapore. Listed on the SGX Mainboard since March 2008, Roxy’s main businesses involve the development and sale of residential and commercial properties, and the ownership of Grand Mercure Roxy Hotel and other investment properties.
On 17 February , Mr. Koh Seng Geok, who is the chief financial officer of the company, bought a minor stake of 60,000 shares priced at S$0.585 each. On the same day, Mr. Teo Hong Lim, executive chairman and CEO of the firm, bought 300,000 shares for a total of S$178,000 (average price of S$0.593). The purchase has increased Teo’s direct stake in the company by a smidge from 9.13% to 9.16% while his deemed interest stayed the same at 49.12%.
Roxy-Pacific last changed hands at S$0.575 on Tuesday and trades at a relatively low Price-to-Earnings ratio of 7.43. It has proposed a final cash dividend of 1.297 cents per share in its latest full-year earnings, bringing total dividends for 2013 to 1.913 cents per share, 50% higher compared to the previous year and giving it a dividend yield of 3.3%.
SBI Offshore (SGX: 5PL)
Established in 1996, SBI Offshore is a home-grown company in Singapore supplying equipment to shipyards and rig-builders in Asia’s offshore and marine industry. Its operations mainly include providing offshore engineering and equipment solutions, steel fabrication, equipment manufacturing and distribution of specialized. Over the years, the company has been transforming itself into an integrated engineering solutions provider to the oil and gas industry with strategic alliances to position itself for offshore and marine projects.
Mr. Hui Choon Ho, a substantial shareholder, acquired 61,000 shares at an average price of S$0.122 each on 12 February. He was the CEO and executive chairman for SBI Offshore from 17 March 2008 to 17 August 2012 and currently controls around 17% of the company. SBI Offshore closed at S$0.122 on Tuesday and it sells for 11.5 times trailing earnings. It offers an annualized dividend yield of 1.6%.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo doesn’t own shares in any companies mentioned.