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2 Companies With Insider Activity

One of the more commonly used strategies by investors is to follow insider transactions. There seems to be a common understanding that insider purchases and disposals both hold significant value for the market since they provide important clues on how well the company is being run.

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 two companies with both insider and substantial shareholder activity over the past two weeks.

Mapletree Industrial Trust (SGX: ME8U)

Mapletree Industrial Trust (MIT) is a Singapore-focused real estate investment trust (REIT). Its main focus is the Singapore industrial property sector that includes business parks and warehouses.

A total of 84 MIT properties, valued at S$3.2billion pepper the central, north, east and west parts of Singapore.These include business park buildings, flatted factories, stack-up/ramp-up buildings, light industrial buildings and hi-tech buildings.

On 19th September 2014, Schroders PLC purchased 8,000 shares at an average price of S$1.415 from the market. With that, it became a substantial shareholder/ unit holder by raising its deemed holdings from 4.999% to 5%. MIT is selling for S$1.41 on Monday with a Price-to-book ratio of 1.19. Its distribution yield stands at a juicy 7.12%.

AIMS AMP Capital Industrial REIT (SGX: O5RU)

AIMS AMP Capital Industrial REIT (AACI) is a real estate investment trust is a real estate investment trust with 26 properties that focuses on industrial properties in Singapore and the Asia Pacific.

Recently, the Trust received the Temporary Occupation Permit (TOP) that represents the completion of its 20 Gul Way development project on 9 September 2014. The entire 20 Gul Way is pre-leased to CWT Limited, a leading Singapore logistics company. It will provide annual rental income of S$22.6 million, more than five times the initial S$3.6 million annual rental income prior to development.

On 18th September 2014, AIMS Property Securities Fund (APW) acquired 380,000 units in the firm at S$1.435 per share on the open market. This transaction pushed up its deemed interest from 7.21% to 7.27%. Mr. George Wang is deemed to have an indirect interest on the units purchased as he is the sole owner of AIMSFM, which in turns owns the entity of APW.

AACI REIT changed hands at S$1.45 on Friday and is currently selling for a P/B ratio of 0.969, coupled with a high distribution yield of 7.26%.

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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.