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. Nordic Group Ltd (SGX: MR7)
Nordic Group Limited is an automation systems integration solutions provider. Its customers are mainly in the marine, oil and gas, aerospace, medical, and electronic industries.
Its business can be divided into four segments: Systems Integration; Precision Engineering; Maintenance, Repair and Overhaul (MRO); and Trading and Scaffolding Services. It operates primarily in Singapore, China, Korea and other Asian countries.
On 16 October, Ms. Teo Ling Ling, Chief Executive Officer of the company, picked up 721,000 shares from the market for a total sum of S$69,216. The transaction increased her direct stake in the firm from 7.32% to 7.5%.
Nordic Group’s shares last changed hands at S$0.099 on Tuesday. The company has a PE ratio of 5.4 and a dividend yield of 2.45%.
2. SATS Ltd (SGX: S58)
Founded in 1972, SATS Ltd (formerly known as Singapore Airport Terminal Services Limited) is a leading service provider to the aviation sector and a host of other businesses in the hospitality, food, healthcare, freight and, logistics industries.
The company has two core business segments: Food Solutions; and Gateway Services.
The former sees SATS handle airline catering, food distribution and logistics, industrial catering, as well as chilled and frozen food manufacturing. In the Food Solutions segment, SATS has successfully extended its reach throughout the Asia Pacific region and has worked with government agencies and companies from different industries like aviation, healthcare, and hospitality.
As for Gateway Services, the segment provides airport-related services such as terminal management and airfreight, baggage, and ramp handling. Besides being the leading service provider at Changi International Airport, the segment’s operations are established in more than 30 airports across Asia. As part of its Gateway Services segment, SATS also operates the cruise terminal Marina Bay Cruise Centre Singapore alongside its partner, Creuers Del Port de Barcelona.
From 31 July to 28 October, the company itself has been steadily buying back shares. Based on its latest transaction on yesterday, SATS has bought a total of 3.99 million of its own shares under its latest share buyback mandate. The mandate, which has a start date of 23 July 2014, allows SATS to buyback up to 22.45 million shares. For some perspective, SATS has an outstanding share count of 1.119 billion shares as of 28 October 2014.
Although the number of shares purchased seems tiny in relation to the company’s overall share count, the buybacks thus far could still be seen as a sign of management’s confidence in the company’s future.
SATS’s shares last traded at S$3.09 on Tuesday. At that price, the company carries a PE ratio of 19 and a dividend yield of 4.3%.
3. Singapore Technologies Engineering Ltd (SGX: S63)
Singapore Technologies Engineering, or ST Engineering in short, provides engineering and related services in four sectors: Aerospace, Electronics, Land Systems, and Marine.
The company is one of Asia’s largest defense and engineering groups with a global network of over 100 subsidiaries and associated companies, located in 46 cities across 24 countries.
On 15 October, Aberdeen Asset Management PLC, a substantial shareholder in the firm, raised its stake in ST Engineering from 8.96% to 9.01% through the purchase of 1.5 million shares at an average price S$3.60 each.
ST Engineering’s shares last traded at S$3.69 yesterday. The company has a PE ratio of 20 and a dividend yield of 2.2%.
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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.