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2 Shares with Insider Activity

Credit: reynermedia

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, share buybacks from companies might be worth watching as well as these buybacks are after all, initiated by the firm’s management. Substantial buybacks over-time can also leave existing shareholders with a bigger slice of the company’s profit and that can be a good thing.

With these in mind, let’s take a look at two companies that have had insider and company-buyback activity over the past two weeks.

1) Second Chance Properties Ltd (SGX: 528)

Second Chance started off as a wholesaler and retailer of ready-made apparel under its First Lady brand which catered to the Malay community. Over the years, the company started to branch out from its clothing business. It started making property investments and also opened gold jewellery retail shops.

On 2 occasions this month – 3 November and 4 November – Mr. Mohamed Salleh Marican, the Founder and CEO of the firm, purchased a total of 591,000 shares at S$0.445 per share via the open market. This helped to push up Salleh’s stake in the firm from 63.34% to 63.43%.

Second Chance’s shares last traded at S$0.445 on Tuesday, unchanged from his purchase price. The company is valued at 20 times trailing earnings and has a juicy dividend yield of 7.9%.

2) OSIM International Ltd. (SGX: O23)

Founded in 1980 in Singapore, OSIM manufactures and distributes healthy-lifestyle products such as massage chairs, foot reflexology rollers, handheld massagers, and fitness equipment. The company also sells nutraceutical supplements and luxury tea under its GNC and TWG Tea retail stores. The company’s retail network now stands at 856 outlets across 30 countries.

Over the past two months, Osim had been buying back shares on a number of occasions. Its latest purchase was made on 11 November 2014 – 1.265 million shares were bought for a total sum of S$2.27 million. At last count, Osim has bought back 3.751 million of its own shares under its current buy-back mandate which started on 28 March 2014.

Osim’s shares last changed hands at S$1.80 on Tuesday. At that price, the company has a PE ratio of 13.4 and a dividend yield of 3.3%.

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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 OSIM.