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 managing 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. Asian Pay Television Trust (SGX: S7OU)
Asian Pay Television Trust is a unique business trust listed in Singapore due to its seed asset: Taiwan Broadband Communication (TBC), the third largest cable TV operator in Taiwan. TBC operates exclusively in Taiwan and offers basic cable television services, premium digital cable television services, and broadband internet services to households and businesses.
On 14 October 2014, Neuberger Berman LLC ceased to be a substantial shareholder of Asian Pay Television Trust as it pared its stake in the trust to less than 5%. Neuberger Berman had sold 869,000 shares at an average price S$0.835 each to bring its interest in the trust (held through different subsidiaries) to 4.951%.
Asian Pay Television Trust last traded at S$0.83 on Friday. That price translates into a price-to-book (PB) ratio of 17.
2. Unionmet (Singapore) Limited (SGX: A6F)
Unionmet, with its tiny market capitalisation of S$32 million, is not likely to be a well-known share in Singapore despite it having being listed on the Mainboard exchange in Singapore since the end of Jan 2007.
The company is a leading manufacturer and supplier of indium ingots with its business operations largely located in Liuzhou, China. Unionmet is also engaged in the sale of the zinc by-products which are derived from its indium extraction process. In 2011, the group expanded its business scope to trade ferrous, non-ferrous, and precious metals; kaolin and barite; and coal and coke.
On 15 October 2014, Li Hua, Unionmet’s Executive Chairman and Chief Executive Officer, acquired 1.856 million shares at an average price of S$0.045 each from the open market. Then, just two days later, Li bought another 2.853 million shares at S$0.048 each. The purchases had increased Li’s direct stake in the company from 1.06% to 1.77%.
In Unionmet’s latest earnings for the quarter ended 31 August 2014, it suffered a loss of US$611,000, up from a loss of US$404,000 incurred a year ago. Shares of the company closed at S$0.048 last Friday.
3. Pacific Radiance Ltd (SGX: T8V)
Pacific Radiance owns and operates a fleet of over 130 young and diverse offshore vessels. Its operations have a global reach and spans Asia, Latin America, Africa, and Australia.
Pacific Radiance has two main business divisions: 1) Offshore Support Services and 2) Subsea Services. As of 30 June 2014, the Offshore Support Services segment contributes to the bulk of Pacific Radiance’s revenue at 73.4% while the Subsea segment makes up 25%.
During the period between 10 October and 17 October, three insiders had bought shares in the company. Goh Chong Theng, an Independent Director of the company, bought 40,000 shares from the market at an average price of S$1.16 each. Next up is Mok Weng Vai, an Executive Director of Pacific Radiance who purchased 142,000 shares of the company to raise his stake in the firm from 6.44% to 6.46%.
The third person is Pang Yoke Min, Pacific Radiance’s Executive Chairman. On 13 and 16 October, he snapped up a total of 2.959 million shares for a total sum of around S$3.166 million. The move boosted his stake in Pacific Radiance from 65.37% to 65.78%.
Pacific Radiance last changed hands at S$1.085 on Friday, carrying a Price-Earnings ratio of 7.5.
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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 owns shares in Pacific Radiance.