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 management of 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. Accordia Golf Trust (SGX: ADQU)
For investors who would want exposure to Japan, Accordia Golf Trust might be one to consider. Having listed in Singapore less than two months ago, the trust owns a portfolio of golf courses and related assets in Japan, though it might yet acquire similar assets elsewhere in the world if the opportunity arises.. Currently, the trust’s portfolio consists of 89 golf courses, making it one of the largest golf course owners in the country.
On 8 Aug 2014, Daiwa Securities Group Inc, a substantial shareholder of the firm, scooped up 2.592 million shares for a total sum of S$2.122 million. The purchase increased the shareholder’s stake in the trust from 6.999% to 7.235%.
Accordia’s last traded price on Tuesday stands at S$0.80. It commands a P/E ratio of 12 at that price.
2. OSIM International Ltd. (SGX: O23)
It’s hard to not know that Osim sells luxury chairs given its many outlets in popular shopping malls in Singapore. But, few know that it had a humble beginning when it was established in 1980 as an electrical and household appliance company under the name of R Sim Trading (the founder of the company is Mr. Ron Sim). The company initially manufactured knives, knife sharpeners, and cloth drying rods but slowly graduated to making healthy lifestyle products.
Today, Osim is Asia’s No. 1 brand in well-being and healthy lifestyle products and the company has more than 580 outlets in 30 countries. North Asia is Osim’s most important geographical market, accounting for 53% of the company’s first quarter (the three months ended 31 March 2014) revenue. Next in line is South Asia, which contributed 42% to first quarter revenue.
Besides its massage chairs and other products of similar ilk, Osim also owns the health-supplement chain GNC and has been amassing a majority stake in the luxury tea brand TWG Tea.
On 5 August 2014, Mr. Peter Lee Hwai Kiat, an Executive Director and Chief Financial Officer of the company, sold 1.504 million shares at an average price of S$2.83 per share. As a result of the sale, his overall stake in the company had dropped from 0.475% to 0.275%.
The company’s shares last changed hands at S$2.85 on Tuesday. This gives Osim a trailing price/earnings (PE) ratio of 19 and a dividend yield of 2.11%.
3. United Industrial Corporation Ltd (SGX: U06)
United Industrial Corporation, or UIC in short, was incorporated in Singapore in 1963 as a private company. It started off manufacturing and distributing detergent and toiletry products before it started to invest in and develop properties. Through a major acquisition of Singapore Land Limited (SGX: S30), United Industrial Corporation is now a major property developer with a portfolio of 2.6 million sq ft of office space and 1 million sq ft of retail premise in Singapore.
On 11 August 2014, Mr. Wee Cho Yaw, Chairman of United Industrial Corporation, bought 100,000 shares of the firm through off-market and open-market transactions at an average price of S$3.3667 per share. Although the number of shares held by Mr. Wee had increased, his stake in the company still fell very slightly from 48.711% to 48.710%. That’s because the number of shares outstanding in the company had increased, thus diluting Mr. Wee’s stake slightly despite him having purchased shares.
UIC last changed hands at S$3.40 on Tuesday and is valued at 13 times earnings at that price. The company also carries a dividend yield of 0.88%.
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 doesn’t own shares in any companies mentioned.