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, a company buying back its own shares can also be considered insider activity. After all, these purchases are sanctioned by management. A company which is actively buying back its own shares might also be building shareholder value if the shares being bought back are considered to be at a lower price than the company’s intrinsic value.
With that in mind, let’s take a look at three companies with both insider and substantial shareholder activity over the past two weeks.
1. 800 Super Holdings (SGX: 5TG)
800 Super is Singapore’s largest private waste disposal company and their services include waste disposal, cleaning and conservancy, and landscape services. This company keeps Singapore clean and green. It is easy to spot them – their logos can be found in the green rubbish bins or on the refuse collection lorries.
On 15th September 2014, Mr. Chan Teck Ee Vincent, Chief Operating Officer of the firm, purchased 50,000 shares for a total amount of S$20,500; translating to a purchase price of S$0.41. This transaction effectively increased his direct interest in the company from 0.22% to 0.25%.
800 Super Holdings’ last traded price on Monday stands at S$ 0.47 and commands a P/E ratio of 9.44. It also sports a dividend yield of 2.13%.
2. The Straits Trading Company Limited (SGX: S20)
Straits Trading Company, or STC in short, is an investment holding company that holds different types of investments across the Asia Pacific region. Its property business is driven by its subsidiary, Straits Developments Private Limited while it also has a hospitality business, which manages and operates a stable of hotels in Asia Pacific. Through its subsidiary, Malaysia Smelting Corporation Berhad, Straits Trading also engages in tin mining and smelting, and resource investments.
12th September 2014, Third Avenue Management LLC, cashed out of its 903,000 shares on an average price of S$2.84 per share. The deemed interest came down from 6.06% to 5.83%; and it still remains as a substantial shareholder of the company.
STC last changed hands at S$2.85 on Monday, translating into a 17.05 times trailing earnings with a dividend yield of 1.40%.
3. Neo Group (SGX: 5UJ)
Listed on 11 July 2012, Neo Group is one of the largest events caterer in Singapore and has 3 brands under their Food Catering Business – “Neo Garden Catering”, “Orange Clove” and “Deli Hub”. The reason for 3 different brands is part of its brand diversification strategy to offer buffets with a wide variety of styles and prices, to suit a diverse range of occasions.
Consumers may be more familiar with Neo Group’s food retail business under the “Umisushi” brand, a Japanese convenient-food outlet serving the busy working adults or students looking for a simple and affordable meal. Neo Group operates 18 of such food retail outlets located in accessible locations near MRT stations and in shopping malls with high human traffic.
On 11th September 2014, Mr. Neo Kah Kiat, founder and CEO of the firm, acquired 375,000 shares at an average price of S$0.99 per share through the open market. With that, his direct interest rose from 69.96% to 70.22%. Through his wife, Ms Liew Oi Peng, Mr Neo controls another 5.6% of the company.
Neo Group last changed hands at S$0.93 on Monday and is currently selling for a PE ratio of 20.95. A dividend yield of 2.75% is derived based on its trailing twelve months dividend payout.
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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.