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

With these in mind, let’s take a look at two companies with insider activity over the past two weeks.

1) GSH Corporation Ltd (SGX: J16)     

Previously known as “JEL Corporation Ltd”, the company underwent a name change back in May 2012. After the change in moniker, GSH’s business was the next to undergo a transformation as it has since shifted its focus from being a distributor of consumer electronics. The company’s now in the business of developing properties and hotels.

It seems like substantial progress has already been made on that front with the announcement that it has completed the acquisition of Equity Plaza on 20 August 2014. The company is also currently developing three residential properties and a resort in Kuala Lumpur and Kota Kinabalu in Malaysia.

On 2 separate occasions on 13 August and 14 August, Sam Goi Seng Hui, the Executive Chairman of GSH, increased his stake in the company by way of open market transactions. Goi is commonly known as the ‘Popiah King’ of Singapore.

The purchase of 18.89 million shares in total for a sum of S$1.44 million on those two days has increased his stake in the company from 46.46% to 46.65%.

Based on GSH’s last traded price of S$0.076 on Friday, GSH is selling for a modest trailing price/earnings (PE) ratio of 9.

2) SBI offshore limited (SGX: 5PL)

SBI Offshore is mainly involved in the marketing and distribution of lifeboats and davits, high pressure pipes, fittings and manifolds for drilling rigs, offshore drilling equipment and/or package and HVAC systems. The company’s main clients for that whole range of products are rig builders in Asia. In addition, SBI Offshore is also involved in the design and manufacture of certified portable offshore cabins for oil services companies.

On 15 August 2014, Jen Shek Voon, a Lead Independent Director of SBI Offshore, acquired 110,000 shares of the company for a total consideration of S$13,420. These securities were purchased through the open market and as a result, he now holds a direct interest of 0.06% in the company in contrast to the zero stakes he had prior to this transaction.

The company’s last traded price on Friday is at S$0.160. At that price, SBI Offshore commands a P/E ratio of 21 and sports a dividend yield of 1.24%.

Click here now for your FREE subscription to Take Stock Singapore, The Motley Fool’s free investing newsletter. Written by David KuoTake 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.