2 companies 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.

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

1) Fisher Tech Ltd. (SGX: F22)

Founded in 1994, Fischer Tech manufactures and sells precision engineering plastic components for electronic products in China, Singapore, Thailand, and Malaysia. The company has two main operating segments, namely, high precision plastic injection, and mould design and fabrication.

The former sees Fischer tech manufacture “plastic components used in products for the automotive, computer peripheral, healthcare, and consumer product industries.” Meanwhile, the latter is where the company makes the moulds needed for the manufacture of plastic injection components.

On 18 Nov 2014, Tan Choon King, CEO & Managing Director of Fischer Tech, acquired 390,000 shares at S$0.16 each via an off-market transaction. The shares were actually bought by Harmony (S) Holdings Pte. Ltd., a company which is 95%-owned by Tan. The purchase has lifted Tan’s stake in Fischer Tech from 57.06% to 57.2%

Fischer Tech’s shares last changed hands at S$0.165 yesterday. The company is valued at 5 times its trailing earnings and sports a dividend yield of 3.64%.

2) JB Foods Limited (SGX: Q0W)

JB Foods is one of the major cocoa ingredient producers in Malaysia with almost three decades in the business.

Cocoa powder and cocoa butter are JB Foods’ two key products and they collectively account for 85% of the company’s total revenue. JB Foods’ products are sold primarily under the JBCOCOA brand name and exported to customers in Asia, Europe, and North America.

On 21 Nov 2014, Goh Lee Beng, an Executive Director of JB Foods, purchased 500,000 shares at an average price of S$0.13 each via the open market. With that, her interest in the firm increased slightly from 49.83% to 49.9%.

JB Foods’ shares closed at S$0.121 yesterday. It has no P/E ratio to speak of as it has not made any profit over the last 12 months. JB Foods has also not declared in its last financial year.

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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.