MENU

2 Companies with Management Putting Their Money Where Their Mouth Is

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 recently seen insiders buying even more shares, or in other words, putting even more money where their mouth is.

1. Cambridge Industrial Trust (SGX: J91U)

As its name suggests, Cambridge Industrial Trust focuses on investing in real estate that’s primarily used for industrial and warehousing purposes.

As of 31 Dec 2014, its portfolio comprises of 50 properties (made up of logistics facilities, warehouses, light industrial buildings, workshops, and business parks) which have a collective value of S$1.37 billion and a total gross floor area of 8.4 million square feet. These properties are mainly situated near major transportation hubs and key industrial zones in Singapore.

On 5 February, Mr. Philip Henry Lewis Levinson, Chief Executive Officer and Executive Director of Cambridge Industrial Trust’s Manager, bought 19,700 shares at S$0.68 each. The purchase had increased Levinson’s stake in the trust from a miniscule 0.0006% to a relatively stronger 0.0021%.

One day before, the wife of Dr. Chua Yong Hai, the Independent Chairman of the trust’s Manager, had also acquired 100,000 units. This gives Chua a deemed interest of 0.0079% in Cambridge Industrial Trust; he had no ownership in the trust previously.

Cambridge Industrial Trust’s units last traded at S$0.68 on Monday.  At this price, the REIT has a price-to-book ratio of almost 1 and boasts a trailing-12-months distribution yield of 7.36%.

2. Hong Fok Corporation Limited (SGX: H30)

Hong Fok is primarily engaged in the investment, development, construction, and management of properties. The company’s portfolio includes prime projects such as Concourse at Beach Road, International Building at Orchard Road, Jewel of Balmoral at Balmoral Park, and ten@suffolk at Suffolk Road among others.

On 20 Jan, Mr. Cheong Sim Eng, the Joint Chairman and Joint Managing Director of Hong Fok, snapped up 55,000 shares of the company for a total sum of S$46,200.

The transaction had increased his total stake in the firm marginally from 16.96% 16.97%.

Hong Fok’s shares closed on Monday at S$0.88 and carries a trailing P/E (price to earnings) ratio of 2.04 and a dividend yield of 1.7% (based on its dividends for the last 12 months).

Click here now for your FREE subscription to Take Stock Singapore, The Motley Fool's free investing newsletter. Written by David KuoTake Stock Singapore tells you exactly what's happening in today's markets, and shows how you can GROW your wealth in the years ahead.

Like us on Facebook  to keep up-to-date with our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

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.