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…
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) Auric Pacific Group Limited (SGX: A23)
Although Auric Pacific might not be a company that’s familiar to many, its business actually touches the daily lives of many Singaporeans.
You see, the company’s involved in the manufacturing, distribution, and retail of food essentials in Singapore. Some of the brands under its manufacturing and distribution arm include Sunshine bread, SCS butter and Gourmet. As for cafes, restaurants, and eateries, the company counts 1Market, Food Junction and Delifrance as some of the popular ones in its portfolio.
Listed on the Mainboard exchange since 1985, the company has grown and expanded its operations into other Asian countries like Malaysia, Hong Kong, and China since.
On two occasions this past week, Saw Phaik Hwa, the Chief Executive Officer of Auric Pacific, had increased her stake in the company. Through the purchase of 10,000 and 5,000 shares at a price of S$1.16 per share, her direct interest in the company had gone up from 0.376% to 0.388%.
Although the purchases might be tiny, it is still interesting to note that Saw has been slowly but steadily buying shares of the company after its latest financial results were announced on 8 August.
The company last traded at S$1.17. There’s no P/E ratio to speak of for the company but there is a modest dividend yield of 1.71%.
2) Ezion (SGX: 5ME)
Ezion’s main business activities involve the development, ownership, and chartering of strategic offshore assets as well as the provision of offshore marine logistics and support services to the offshore oil and gas industry.
It owns a fleet of sophisticated multi-purpose self-propelled jack up lifeboats. It also has fleets of special purpose vessels and ballastable vessels under its wing. These vessels are used to commission and decommission offshore platforms, amongst other uses.
On 15 August, Commonwealth Bank of Australia purchased 3.759 million shares at for a total sum of S$7.781 million via the open market. The bank’s stake in Ezion had thus increased from 4.84% to 5.13% as a result.
Then on 21 August, First State Investment Management (UK) Limited, snapped up 1.328 million shares for a sum of S$2.9 million. Following this acquisition, First State’s deemed interest in the company grew from 4.99% to 5.09%.
Ezion last changed hands at S$2.21. That translates into a P/E ratio of 12 and dividend yield of 0.05%.
3) Nam Cheong Ltd (SGX: N4E)
From its humble start as a builder of fishing boats, Nam Cheong has witnessed phenomenal growth over the last four decades, evolving into Malaysia’s largest builder of Offshore Support Vessels today.
The company has built a strong reputation across South East Asia and other parts of the world by focusing on a unique Build-to-Stock business model which also results in higher margins. A Build-to-Stock model sees the vessel builder building new vessels and storing them as inventory in the hopes that buyers would emerge shortly.
On 26 August, Datin Wong Bak Hee, a substantial shareholder of the company, acquired 650,000 shares at S$0.47 each for a total sum of S$305,500, . Consequently, her interest in the company had rose from 50.472% to 50.503%.
Nam Cheong’s last traded price was at S$0.465, a drop of 1% from her purchase price. The company’s P/E ratio stands at 9 and it offers a dividend yield of 1.1%.
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he 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.