One of the more commonly used strategies by investors is to follow the insider transactions. Some might even assume that since insiders are “in the know”, they will be able to predict or control the price of the company. One of the best Mutual Fund managers in America, Peter Lynch, once wrote in his best-selling investment book One Up on Wall Street that “insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.” A peek into insider buys might also clue you in to potentially positive future…
One of the more commonly used strategies by investors is to follow the insider transactions. Some might even assume that since insiders are “in the know”, they will be able to predict or control the price of the company.
One of the best Mutual Fund managers in America, Peter Lynch, once wrote in his best-selling investment book One Up on Wall Street that “insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.” A peek into insider buys might also clue you in to potentially positive future developments in a company’s business. After all, chances are slim that insiders would risk their own money to purchase even more shares of a business that they know is going downhill – and they should know the business much better than the average investor.
Let’s take a look at three companies with insider activity for the past week.
DBS Group Holdings Limited (SGX: D05)
DBS is the largest bank in Singapore as measured by assets with a regional network that spans across 250 branches in 16 countries. The bank’s operations are focused mainly in Asia, but Singapore and Hong Kong account for the lion’s share of its profits at 62% and 21% respectively.
From the beginning of 10 March 2014 to 14 March 2014, DBS has bought back a total of 2.1 million shares through a series of daily transactions. The shares being acquired are priced between the range of S$15.70 for the lowest and S$16.11 at the other spectrum. The shares are now held as treasury shares and accounts for 0.1598% of company’s issued shares; equivalent to a cumulative 3.9 million shares.
DBS last traded at S$15.91 on Monday, still at the lower end of the company’s buyback spree. Its P/E ratio is currently 10.55 and offers an annualized distribution yield of 3.65%.
BRC Asia Limited (SGX: B03)
Incorporated in 1938, BRC Asia Limited is one of the leading steel reinforcing solutions providers in Singapore. Besides customizing products to the customers’ requirements, BRC Asia also evaluates the types of prefabricated steel reinforcement required, followed by design, manufacturing to assembly on site.
On 11 and 12 March 2014, a considerable sum of 5.909 million shares were snapped up by Sin Teck Guan (Pte) limited at a price of S$0.215. Sin Teck Guan is a family business owned by 4 brothers with equal stakes of 25% each – Lau Eng Lin, Lau Eng Seng, Lau Eng Hoe and Lau Eng Tiong. It now owns a deemed interest of 8.8121% of the total number of voting shares.
Roxy-Pacific last changed hands at S$0.22 on Monday and trades at a relatively low Price-to-Earnings ratio of 5.38. It also sports a dividend yield of 3.64%.
SATS Limited (SGX: S58)
Ever wondered which company prepares the food that you eat high up in the sky? Well, SATS might just be one of them. The company is the top airline caterer at Singapore Changi Airport handling about 80% of its ground handling and catering business. SATS operates in 2 main business segments – food solutions and gateway services. It will also operate Singapore’s new cruise terminal Marina Bay Cruise Centre Singapore.
SATS has been aggressively buying back its shares on a daily basis between 24 February 2014 and 11 March 2014. As of 11 March 2014, the cumulative no. of shares purchased to-date is 5.67 million shares, equivalent to 0.505% of the outstanding issued shares.
SATs closed at S$3.07 on Monday and it sells for 18.72 times earnings. It offers an annualized dividend yield of 3.58%.
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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.