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. It must be noted that there is no basis for that as insiders might be selling for their own personal reasons. With…
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. 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 with managements who have made insider purchases – in other words, putting their money where their mouth is – over the past two weeks.
1. A-Sonic Aerospace Ltd (SGX: A53)
A-Sonic Aerospace is mainly engaged in aerospace engineering-related businesses and logistics businesses. . Under the former, the company supplies aircraft systems and aerospace components to airlines and aviation maintenance and repair outfits. The company is also engaged in the purchase, upgrade/retrofit, sale, and/or leasing of aircraft.
For the latter business, A-Sonic Aerospace provides a wide range of logistics solutions such as airport ground services for cargo, warehousing, and customs clearance. In addition, the company also acts as an air cargo general sales agent for various international airlines.
With both areas of business, A-Sonic Aerospace has operations in 51 cities and 17 countries across four continents.
On 8 December 2014, Janet Tan, Chairman and CEO of A-Sonic Aerospace, purchased 30,000 shares at S$0.07157 each in the open market. With the purchase, her stake in the firm had grown from 51.582% to 51.586%. It is worth noting that Tan had also bought a total of 63,000 shares at around 7 Singapore cents each on 19 and 20 November 2014.
A-Sonic’s shares last traded at S$0.063 on Friday. At this price, the company is valued at a sky-high price/earnings (PE) ratio of 479; the firm has no dividend yield to speak of as well. .
2. UG Healthcare Corp (SGX: 41A)
UG Healthcare, which only got listed on the Catalist board earlier this month, is an established glove manufacturer based in Malaysia that derives the bulk of its revenue from the production of natural latex and nitrile examination gloves.
The firm currently has two manufacturing facilities based in Seramban Malaysia that has a combined annual production capacity of up to 1.3 billion pairs of gloves. UG Healthcare intends to use the majority of its listing proceeds to expand its production capacity with the aim of hitting 1.9 billion pairs of gloves annually by July 2015.
On 9 December 2014, Lee Jun-Yih, Executive Director of UG Healthcare, snapped up 523,000 shares at an average price of S$0.22 each. The transaction bumped up his total stake in the firm from 49.166% to 49.444%.
UG Healthcare’s shares last changed hands at S$0.23 last Friday. Based on its earnings per share of S$0.0261 for FY2014 (financial year ended 30 June 2014), UG Healthcare’s shares are valued at a price to earnings (P/E) ratio of less than 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.