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2 Companies with Insiders Eating More of Their Own Cooking

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, eating more of their own cooking.

1. Wilmar International Limited (SGX: F34)

Founded in 1991, Wilmar International is today a global agribusiness company that focuses on the processing, merchandising, and distribution of a wide range of agricultural products including oil palm, sugar, biodiesel, and grain, amongst others.

In order to support its integrated business model, Wilmar also owns its own fleet of vessels to sell and distribute its products in over 50 countries. The company’s shipping operation is managed by a subsidiary called Raffles Shipping Corporation Pte Ltd.

On 20 March 2015, Balkane Investmnet Pte Ltd bought 50,000 shares of Wilmar at S$3.20 each. Kuok Khoon Ean, a non-executive director of Wilmar, is deemed to have an interest in those shares purchased by Balkane Investment.

The transaction had increased Kuok’s stake in Wilmar slightly from 0.519% to 0.520%.

Wilmar International’s shares last changed hands at S$3.25 on Monday. The company is valued at 14.5 times its trailing earnings and has a dividend yield of 2.3% based on its dividend of 7.5 Singapore cents per share for the whole of 2014.

2. ABR Holdings Limited (SGX: 533)

You may have patronized Swensens or Gloria Jean’s Coffees outlets in Singapore without thinking about any common links between them. But, both are actually run by ABR Holdings.

ABR Holdings currently operates over 20 restaurants in Singapore and “remains one of the market leaders in the western casual dining category.” The company also manages a portfolio of F&B (food and beverage) sub-brands and franchises, including Yogen Fruz, Hippopotamus, and more.

On 20 March 2015, Ang Yee Lim, ABR Holdings’ managing director, had bought 177,000 shares of the firm at S$0.78 each. With the purchase, Ang’s stake in ABR Holdings had been bumped up from 44.69% to 44.78%.

ABR’s shares last traded at S$0.78 on Monday.  At that price, the company’s shares carry a trailing price to earnings ratio of 18 and a dividend yield of 3.2% (based on its dividend of 2.5 Singapore cents for 2014).

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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.