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3 Companies with Insider Activity

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 – it must be noted, however, that there is no basis for that as insiders might be selling for their own personal reasons.

In addition, companies that buy back their own shares might also be worth noting as such shares might present potential bargains. At the same time though, investors also ought to be careful as share buybacks are approved by management – they are also human like any other investor and can fall prey to greed and despair, resulting in sub-optimal share buybacks.

With that in mind, let’s take a look at three companies with significant buyback activity over the past week.

1. Jason Marine (SGX: 5PF)

Founded in 1976, Jason Marine started off repairing marine electronic equipment onboard vessels. Over the years, the company has steadily transformed into a leading provider of integrated solutions for communication, navigation and automation systems for the marine and offshore oil & gas industries.

On 10 June 2014, Jason Marine bought back 250,000 shares via the open market at S$0.24 each. The transaction amounts to a total sum of S$60,282.49 and equates to 0.236% of the company’s total number of issued shares. This is the first purchase of shares done by the firm after its share buy-back resolution was passed at its Annual General Meeting held on 25 July 2013.

Jason Marine last traded at S$0.24 on Wednesday. Shares of the company carry a P/E ratio of 9.13 and an annualized dividend yield of 0.83%.

2. Chip Eng Seng (SGX: C29)

The history of Chip Eng Seng dates all the way back to the 1960s when it started off as a building subcontractor. Over the years, its business has evolved into what it is today: A construction, civil engineering, property investment, and real estate development outfit.

On four separate occasions between 3 June 2014 and 6 June 2014, the company had bought a total of 2.83 million shares of itself at a price of S$0.755 each. After the recent round of buybacks, Chip Eng Seng’s treasury shares had increased to a whopping 30.54 million. By way of comparison, Chip Eng Seng had 642 million existing shares as of 31 March 2014.

Chip Eng Seng last changed hands at S$0.0.76 on Wednesday, marginally up from the share buyback price of S$0.755. A slowdown in Singapore’s property market may have pushed investors away from property and building construction companies. That could perhaps explain why Chip Eng Seng is only selling at a P/E ratio of 5. The company also sports an annualized dividend yield of 5.3%.

3. TeleChoice International  (SGX: T41)

TeleChoice is a regional provider of info-communications products and services. Headquartered in Singapore, it operates across 3 divisions – Distribution Services, Telecommunications Services, and Mobile Network and Engineering Services – in the Asia-Pacific region which includes Indonesia, Australia and Malaysia. It counts companies like Starhub, PT Indosat Tbk, Mitsubishi, Nokia, Samsung, and Sony Ericsson as its customers.

On 4 June and 5 June, TeleChoice bought a total of 251,000 shares at a price of S$0.25 each via the open market. The purchase represents only 0.055% of the company’s total share count. TeleChoice closed at S$0.255 on Wednesday. Its shares are valued at 11 times trailing earnings and offers an attractive dividend yield of 6.27%.

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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.