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….
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 two companies that have had either insider and/or substantial-shareholder activity over the past two weeks.
1. Keppel Corporation Limited (SGX: BN4)
With over 46 years of operational experience under its belt, Keppel Corporation is a bona fide Singapore-based conglomerate with interests in marine, real estate, and infrastructure businesses.
Under the marine business, Keppel Offshore & Marine designs and builds mobile offshore rigs and also provides ship repair, conversion, and specialized shipbuilding services. The infrastructure side of things sees Keppel Corporation being involved with energy infrastructure, logistics facilities, and data centres. Lastly, the company’s real estate business is led by Keppel Land, which develops award-winning residential developments, integrated townships, and investment-grade commercial properties.
On 4 November, asset manager Aberdeen Asset Management PLC, a substantial shareholder of Keppel Corporation, purchased 513,000 Shares at S$9.51 each via the open market. This helped to increase Aberdeen Asset Management’s stake in the firm from 6.99% to 7.02%.
Keppel Corporation’s shares last changed hands at S$9.13 on Monday. The company sports a price/earnings (PE) ratio of 9 and a dividend yield of 4.4%.
2. StarHub Ltd. (SGX: CC3)
Starhub would likely be a company very familiar to most Singaporeans given that it is one of the three dominant telecommunication service providers here together with Singapore Telecommunications Limited (SGX:X74) and M1 Ltd (SGX:B2F). The company’s product offerings include mobile network services, multi-channel cable TV services (including High Definition and on-demand services), as well as high-speed residential broadband services.
On 6 November, The Kaviratne Family Trust had sold 134,812 Starhub shares at S$4.16 each. Mr. Nihal Vijaya Devadas Kaviratne, an independent director of Starhub, is deemed to have an interest in all the Starhub shares which are owned by The Kaviratne Family Trust. After the sale, Mr. Kaviratne still owns a total of 56,000 Starhub shares (including the shares which are still owned by The Kaviratne Family Trust). That works out to be a tiny 0.0032% of Starhub’s total share count.
StarHub’s shares last changed hands at S$4.06 on Monday. At that price, the company has a P/E ratio of 20 and a dividend yield of 4.9%.
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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.