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.
In addition, while substantial shareholders are often not involved with running the company and are thus not strictly classified as ‘insiders’, their moves with a company’s shares might be worth noting too for the simple reason that substantial shareholders have a big stake in a company and would likely have done the requisite homework.
With that in mind, let’s take a look at three companies with both insider and substantial shareholder activity over the past two weeks.
Centurion Corporation (SGX: OU8)
Centurion, formerly an optical disc manufacturing outfit, had ventured into the dormitory-accommodation business back in 2011. Today, it is one of the largest independent dormitory owner-operators in Singapore and manages eight dormitories under the Westlite brand in Singapore and Malaysia.
In Singapore, the company has three dormitories in operation – one of which is a 45-55 joint venture with civil engineering outfit Lian Beng Group (SGX: L03) – with a total capacity of 19,700 beds. In Malaysia, it has five operational dormitories with have a total capacity of 13,500 beds. Upon completion of upgrading works of one asset in Singapore and development of three new accommodation assets, the Group’s accommodation portfolio is expected to expand to over 53,000 beds by the end of 2015.
From 14 to 16 May 2014, Mr. Lee Kerk Chong, an executive director of the firm, had sold 2 million shares in the open market for a sum of S$1.46 million. The average selling price per share works out to be around S$0.73 and the sale had brought his holdings in the company down to 28.4 million shares ( that’s 3.75% of Centurion’s share count). On a side note, Mr. Lee also holds 3,037,627 Bonus Warrants in the company as of 16 May 2014.
Centurion Corp last traded at S$0.7352 on Tuesday, commanding a P/E ratio of 5 and offering a dividend yield of 0.82%.
ComfortDelgro Corporation (SGX: C52)
ComfortDelGro is a global land transport company with a fleet of more than 38,700 vehicles world-wide. It operates in various businesses such as transport leasing, inspection services, outdoor advertising, and automotive engineering and maintenance services just to name a few.
Besides having majority stakes in public bus operator SBS Transit (SGX: S61) and vehicle inspection outfit Vicom (SGX: V01), ComfortDelGro is also Singapore’s largest taxi operator with more than 17,000 taxis. In addition, it does business in 12 cities in China and its overseas operations extends all the way from the United Kingdom and Ireland, to Vietnam and Malaysia.
On 6 May, BlackRock Inc, a substantial shareholder, sold 685,000 shares for a total sum of S$1.39 million and brought its stake in ComfortDelGro down from 6% to 5.97%. Comfort Delgro’s share price has been on a solid run in recent weeks, gaining 10.8% since its close at S$2.12 at the start of May, due to the changes the authorities have made to the public bus industry. ComfortDelgro last changed hands at S$2.35 on Tuesday and is valued at 19 times trailing earnings. It also sports a dividend yield of 2.98%.
GKE Corp (SGX: 595)
GKE Corp is focused on 3rd party logistics where it provides an integrated and comprehensive logistics service.
On 19 May, Mr. Kwan Chee Seng, a substantial shareholder of the firm, sold 4.5 million shares for a total sum of S$629,500. After the sale, Kwan’s stake in the company had been pushed down to 4.17% and he is no longer considered a substantial shareholder in GKE Corp. That’s because an individual or organisation needs to own 5% or more of a company to be deemed as a substantial shareholder.
GKE Corp closed at S$0.124 on Tuesday. It offers a historical yield of 2.4% based on its dividend for its last completed financial year.
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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.