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…
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 (shareholders who control 5% or more of a company) 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 these in mind, let’s take a look at three companies with both insider and substantial shareholder activity over the past two weeks.
1. Haw Par Corporation (SGX: H02)
From its humble beginnings as the creator and maker of the medicinal Tiger Balm, the Haw Par Corporation has steadily expanded its operations into four different segments today: Healthcare, Leisure, Property, and Investments.
The company’s healthcare products are manufactured and marketed under its various established brands such as Tiger Balm and Kwan Loong. Haw Par’s flagship product Tiger Balm is an ointment which is used to relieve aches and pains amongst other uses.
Under its Leisure arm, Haw Par owns and operates 2 oceanariums: The Underwater World Singapore in Sentosa and Underwater World Pattaya in Thailand.
Through the free cash flow generated by its Healthcare and Leisure businesses, Haw Par attained the financial muscle needed to venture into the property and investments space. Regarding its Property segment, Haw Par’s a proprietor of commercial and industrial properties in prime areas within Singapore, Malaysia and Hong Kong. As for the company’s Investment operations, it consists mainly of strategic holdings in other locally-listed shares like United Overseas Bank (SGX: U11), UOL Group (SGX: U14), and United Industrial Corporation (SGX: U06).
On 1 and 14 July 2014, Mr. Han Ah Kuan sold 25,000 and 45,000 shares respectively. The disposals, which were done at around the same share prices of S$8.55 and S$8.59 each, effectively reduced his stake in the company from 0.074% to 0.042%. Han is an executive director of the company and general manager of one of its subsidiaries, Haw Par Healthcare Limited.
Haw Par’s last traded price as of last Friday stands at S$8.60. That gives the company a trailing PE (price/earnings) ratio of 17 and a dividend yield of 2.3%.
2. Ezion Holdings (SGX: 5ME)
Ezion Holdings specializes in the building, ownership, and chartering of offshore assets. It also provides offshore marine logistics and support services to the oil & gas industry. Some of the offshore assets owned by Ezion include “one of the largest and most sophisticated class of Multi-purpose Self Propelled Jack-up Rigs (“Liftboats”) in the world”; tugs; ballastable barges; offshore support vessels; and self-propelled barges.
On 15 July 2014, Templeton International, a substantial shareholder of Ezion Holdings, sold 2.415 million shares on the open market at S$2.01 each for a total sum of S$4.852 million. Just three days later, another of Ezion Holdings’ substantial shareholders, Franklin Resources, snapped up 3.319 million shares at S$2.10 each via market transactions; the purchase brought Franklin Resources’ stake in Eizon Holdings higher from 6.8% to 7.05%.
Ezion Holdings last changed hands at S$2.12 on Friday and is valued at 13 times its trailing earnings. The company also sports a tiny annualised dividend yield of just 0.05%.
3. Oxley Holdings (SGX: 5UX)
Oxley Holdings is a property developer which is primarily engaged in the development of residential, commercial, and industrial projects. Some of its significant developments in Singapore include Devonshire Residences, Viva Vista, Oxley BizHub, Oxley Tower, and Robinson Square. Most of these developments are fully sold out, while the rest continue to be well-received by the market. Over the past year, it has been venturing overseas with 2 projects: The Bridge in Cambodia, and Royal Wharf in the United Kingdom.
Mr. Tee Wee Sien, a substantial shareholder of the company, continued his previous purchases (made in June this year) of shares of Oxley Holdings. From 17 July to 21 July, he snapped up a total of 675,000 shares at prices that ranged from S$0.675 to S$0.68 per share. As a result, his stake in the company rose to 12.5% from 12.07%.
Oxley Holdings last changed hands at S$0.675 on Friday. It is currently selling for a low PE ratio of only 6 but sports a tiny annualised dividend yield of 0.44%.
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.
The Motley Fool's purpose is to help the world invest, better. Like us on Facebook to keep up-to-date with our latest news and articles.
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 owns shares in Oxley Holdings.