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 that there is no basis for that as insiders might be selling for…
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 that there is no basis for that as insiders might be selling for their own personal reasons.
With that in mind, let’s take a look at three companies with insider activity over the past week.
TEE Land (SGX: S9B)
While TEE Land Limited started off as a property developer for quality and well-designed residential properties, it has slowly undertaken commercial and industrial property development projects. After establishing a foothold in its existing markets of Singapore, Malaysia, Thailand and Vietnam, the company has since drawn up plans to expand into newer markets such as Myanmar, Sri Lanka and New Zealand.
On 19 March 2014, Chin Sek Peng, an independent director of TEE Land, increased his deemed holdings by 0.022% through the 100,000 shares bought by his spouse at a price of S$0.285 each. On top of his 0.058% direct interest in the firm, Chin now controls 360,000 shares, or 0.08% of the company.
TEE Land last traded at S$0.285, near its 52-week lows. However, its P/E ratio is on the high side at 47 and it only offers a rather low annualized distribution yield of 1.8%.
Singapore Airlines (SGX: C6L)
Founded in 1972, Singapore Airlines has evolved to become the one of the most respected airlines in the world. The carrier is well-known for its air stewardesses who are dressed in their signature “baju kurong”.
On top of that, SIA has always been at the forefront of innovation, coming up with many firsts in the industry. For instance, it was the first to offer free drinks, headsets, and meal choices onboard its economy class flights in the 1970s. More recently, the company was the first airline to have flown the A380 aircraft from Singapore to Sydney on Oct 2007.
SIA now owns over 20 subsidiaries covering a range of airline-related services from cargo to engine overhaul. Some of its subsidiaries include aircraft engineering outfit SIA Engineering Company (SGX: S59), full-service carrier SilkAir, and the budget airline Scoot.
SIA has been aggressively buying back its shares on several occasions between 13 and 21 March 2014. As of 21 March 2014, the cumulative no. of shares purchased to-date is 1.069 million shares, equivalent to 0.09% of the company’s outstanding share count. Amongst that spell of share buy-backs, the highest and lowest price paid for each share was S$10.29 and S$10.11 respectively.
Singapore Airlines is currently worth S$10.33 and trades at a Price-to-Earnings ratio of 30. It also sports a dividend yield of 2.6%.
Hong Fok Corporation (SGX: H30)
A low profile name in the property business, Hong Fok Group’s principal activities revolve mainly around property investment, development and management. The company owns or invests in properties located in Singapore and Hong Kong; its property portfolio includes names like The Concourse, Henderson Industrial Park and Wing Fai Centre, among others.
On 6 March 2014, Cheong Sim Eng, currently the joint chairman and managing director of Hong Fok, acquired 400,000 shares for a total sum of S$289,300. With the trade, Cheong now owns 16.58% of the company, with 11.741% being owned directly by him and the remaining 4.839% being Indirectly owned.
Hong Fok’s at a price of S$0.73 now. At that price, it sells for just 1.6 times earnings but investors have to take note that its profits are bumped up by significant re-valuation gains. It offers an annualized dividend yield of 0.82%.
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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.