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.
Frencken Group Limited (SGX: E28)
Frencken Group, formerly known as ElectroTech Investments, is a global high-tech capital and consumer equipment service provider. It operates in 2 business segments – Mechatronics and IMS (Integrated Manufacturing Services) and serves customers worldwide through a global network of operating subsidiaries. It also provides an integrated ‘one-stop’ outsourcing solution in partnership with their customers which include corporate bigwigs like Panasonic and Seagate.
On 21 March 2014, CIM Investment Management Limited sold off 2 million shares for a total consideration of S$680,000. As a result, its deemed interest was reduced significantly from 6.44% to 5.94% of Frencken’s issued share capital. CIM Investment Management Limited is deemed to have an interest in Frencken Group’s shares that are held by DBS Bank Ltd and Standard Chartered Bank in their capacities as investment manager of 3 funds: CIM Dividend Income Fund Ltd; Palladium Value Fund; and Van Biema Asia Value Master Fund LP.
Frencken group last traded at S$0.36 on Friday. Its P/E ratio stands at 8 and offers an annualized distribution yield of 3.9%.
GP Batteries (SGX: G08)
Listed in 1991, GP Batteries International Limited is principally engaged in the development, manufacture and marketing of batteries and battery-related products. GP Batteries’ production facilities are located in Singapore, Hong Kong, China, Taiwan, and Malaysia, and are supported by marketing and trading offices that span Asia, Europe and North America. The company currently employs about 8,000 people worldwide and occupies a total floor area of approximately 312,000 square metres.
Mr. Richard Ku, vice-chairman of the company, has been paring down his stake in GP Batteries on several occasions. From 12 to 24 March 12, he sold a total of 138,000 shares and his direct interest in GP Batteries dropped to 0.09% of the outstanding issued shares.
GP batteries last changed hands at S$0.58 on Friday, down 45.41% from the previous year. Based on its latest financial results, it has started to make losses and management has highlighted that they are experiencing difficulties in turning around the company.
The Hour Glass Limited (SGX: E5P)
Started in July 1979 as a single watch retail shop in Lucky Plaza in Singapore,The Hour Glass has grown over the years and now represents a stable of over 50 brands across 29 boutiques in 10 cities throughout Asia Pacific. Hour Glass holds exclusive agency and distribution rights to many famous brands such as Burberrys, Christian Dior and Montega. It is also the authorised retailer to leading brands such as Patek Philippe, Cartier, Tag Heuer, Omega, Rolex, and Raymond Weil.
On 24 and 25 March, DATO’ Dr. Jannie Chan Siew Lee, the Executive Vice Chairman, acquired 11,000 and 30,000 shares at prices of S$1.655 and S$1.665 respectively. With the new purchases and all the shares she owns in the company, Dr. Jannie Chan now controls 49.25% of The Hour Glass.
The Hour Glass closed at S$1.67 on Friday and is valued at 7.7 times earnings. It offers an annualized dividend yield of 3.3%.
Click here now for your FREE subscription to Take Stock Singapore, The Motley Fool’s free investing newsletter. Written by David Kuo, Take Stock Singapore tells you exactly what’s happening in today’s markets, and shows how you can GROW your wealth in the years ahead.
Like us on Facebook to keep up-to-date with our latest news and articles. The Motley Fool’s purpose is to help the world invest, better.
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.