2 Companies with Substantial Shareholder 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. It must be noted though that there is no basis for that as insiders might be selling for their own personal reasons.

In addition, while substantial shareholders (shareholders who control 5% or more of a company) are often not involved with managing the company and are thus not strictly classified as ‘insiders’, their moves with a company’s shares might be worth noting too for the simple reason that substantial shareholders have a big stake in a company and would likely have done the requisite homework.

With these as a backdrop, let’s take a look at two companies that have seen substantial shareholder activity over the past two weeks.

1. AIMS AMP Capital Industrial REIT (SGX: O5RU)

Formerly known as MacarthurCook Industrial REIT, AIMS AMP Capital Industrial REIT is a real estate investment trust that invests primarily in industrial properties with a focus on three key sectors: Warehousing & logistics, manufacturing, and business parks.

Currently, the REIT’s portfolio consists of 25 properties in industrial zones in Singapore (these are collectively valued at S$1.23 billion as of 31 March 2015). In addition, the REIT also holds a 49% interest in the A$398 million Optus Centre business park located in Sydney, Australia.

On 24 April 2015, banking outfit JP Morgan Chase had sold 155,900 units of AIMS AMP Capital Industrial REIT for S$1.52 each. The transaction had reduced JP Morgan Chase’s stake in the REIT from 5.01% to 4.98% and with that, the bank is no longer deemed to be a substantial shareholder.

AIMS AMP Capital Industrial REIT’s units last changed hands at S$1.485 on Wednesday. At that price, the trust is valued at 0.97 times its book value.

2. Overseas Education Ltd  (SGX: RQ1)

Founded in 1991, Overseas Education is an aptly-named private education provider based in Singapore that caters to children, aged 3 to 18, of expatriates working here.

The company operates the Overseas Family School, “a leading private foreign system school” in Singapore, and offers the K-12 International Baccalaureate (IB) curriculum in its education programme.

On 21 April 2015, Eastspring Investments Limited, an investment arm of insurer Prudential, had sold 100,000 shares of Overseas Education at S$0.88 each in the open market. As a result, Prudential’s interest in the education provider had dropped slightly from 7.0% to 6.98%.

Overseas Education’s shares last traded at S$0.88 on Wednesday. At that price, the company’s shares carry a price-to-earnings (PE) ratio of 16.

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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.