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.
Keppel Corporation (SGX: BN4)
As an anchor component of the Straits Times Index (SGX: ^STI) with a stellar reputation and track record, Keppel Corp is another of Singapore’s oldest companies with a history dating back to 1859, when it built the first dry dock for ship repairs at Keppel Harbour.
Today, the company has interests in three divisions, namely Marine, Property, and Infrastructure. While its Offshore & Marine division, under Keppel Offshore & Marine, still carries out ship repairs, it is now a global leader in offshore rig design, construction and repair.
The Infrastructure division is involved in areas like electricity generation, water purification, and the treatment of solid waste. Within this division contains other publicly-listed entities like Keppel Infrastructure Trust (SGX: LH4U) and Keppel Telecommunications & Transportation (SGX: K11).
Meanwhile, Keppel Land (SGX: K17) is part of Keppel Corp’s property arm which focuses on developing residential, office, and commercial properties. Some of Keppel Land’s past projects include the Caribbean, Reflections, and Corals condominiums as well as the luxury yacht bay, Marina at Keppel Bay.
On April 21, Keppel Corp’s board acquired a total of 49,000 shares in the open market. Chairman Mr. Lee Boon Yang purchased 20,000 shares while 29,000 were snapped up by the rest of the directors. Two days after that, investment outfit Aberdeen Asset Management Asia Limited – a substantial shareholder of Keppel Corp – amassed a whopping 1,227,000 shares for S$13.044 million in total (an average price of S$10.63 per share). As a result of the latest transaction, Aberdeen’s deemed interest in Keppel Corp rose from 5.99% to 6.06%.
Keppel Corp last traded at S$10.51 on Friday and is valued at 10 times its trailing earnings.
TMC Education Corporation Ltd (SGX: 586)
An education and training outfit that started in 1981, TMC Education now administers about 30 undergraduate and postgraduate programmes with its major institution partners such as Monash College in Australia, Liverpool John Moores University, University of Aberdeen, and University of Gloucestershire, among others. The company has three campuses at present, with two located in Singapore and one in Shenyang, China.
On April 21, Mr. Eugene Wong, an Independent Director and Chairman of the Nominating Committee of TMC Education, bought 100,000 shares of the firm at S$0.072 each. WIth the purchase, Wong’s direct stake in the company has increased from 2.5% to 2.56%. While the acquisition might signal Wong’s confidence in the future of the company, TMC has reported deteriorating financial results for a number of years and had stressed in its 2013 annual report that its student numbers have been waning due to the competitive landscape of the for-profit education sector.
TMC Education Corp last changed hands at S$0.079 on Friday with no Price-to-earnings ratio to speak of due to its losses made over the past year. Nevertheless, it still offers an annualized dividend yield of 0.76%.
Singapore Kitchen Equipment (SGX: 5WG)
Singapore Kitchen Equipment is a one-stop commercial and industrial kitchen solutions provider which specializes in a whole range of services that range from the design to the setting up and maintenance of the kitchens. The company’s major customers include central kitchens, integrated resorts, hotels, government agencies and restaurants.
On several occasions between 17 April and 23 April, a total of 420,000 shares have been snapped up by Sirius Venture Capital Pte Ltd. Mr. Eugene Wong, who holds 100% of Sirius Venture and is a director of Singapore Kitchen Equipment, is therefore deemed to have an interest of 3.7% in the latter after the series of transactions.
Singapore Kitchen Equipment closed at S$0.18 on Friday and it sells for 180 times its trailing earnings. It offers an annualized dividend yield of 2.78%.
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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.