2 Companies with Insiders 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. China Environment Ltd  (SGX: 5OU)

China Environment is a provider of industrial waste gas treatment solutions and is based in the Fujian Province of China.

More specifically, the company helps to design and construct products (some of the products include electrostatic precipitators, bag houses, and hybrid dust collectors which eliminate dust particles and toxic substances) to treat waste gases that are emitted from industrial facilities.

The majority of China Environment’s customers come from the Power Generation sector. The firm’s other major customer groups belong to the Steel and Metallurgy, and Chemical sectors.

On two separate occasions on 17 and 19 March, Huang Min, the Executive Chairman of China Environment, had bought some shares of the company which raised his overall interest in the firm from 18.57% to 18.78%. Huang had purchased 984,000 shares at S$0.146 each on the first day and 600,000 shares at S$0.139 each on the second day.

China Environment’s shares last traded at S$0.144 last Friday. At that price, the company trades at 6.8 times its trailing earnings.

2. VGO Corp Ltd (SGX: PH0)

Retail outfit VGO Corp may not be a familiar name to many, but its World of Sports stores might strike a chord with some.

With over 20 years of presence in the sports retail scene, World of Sports carries an assortment of sporting goods, apparel, and accessories in its stores. Besides World of Sports, VGO Corp also runs other retail store brands like 6five Barcode, Bread & Butter, and Camper, amongst others.

While VGO Corp’s sales have increased steadily from S$40 million in 2008 to S$67 million over the 12 months ended 30 September 2014, its bottom-line has been erratic with profit dropping from S$354,000 to just S$113,600.

On 12 March, Goh Ching Huat, Chief Executive Officer of VGO Corp, had personally bought 65,000 shares at S$0.18 apiece from the open market. This transaction had increased his total stake in the firm from 60.87% to 60.94%.

VGO Corp’s shares closed at S$0.18 last Friday. At that price, the firm has a sky-high P/E ratio of nearly 150.

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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.