2 Companies with Recent Substantial Shareholder Activity

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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. Religare Health Trust (SGX: RF1U)

Religare Health Trust is a business trust which invests in healthcare assets in India. It currently has18 healthcare assets in its portfolio that’s located across the country.

These assets, which have a total installed bed capacity of 3,594 (operational bed capacity of 2,550), are collectively valued at S$857 million and are made up of 12 clinical establishments, four greenfield clinical establishments, and two operating hospitals.

Relligare Health Trust’s latest fiscal third-quarter earnings (for the three months ended 31 December 2014) saw it deliver some great numbers with total revenue and distributable income growing by 39% and 18% year over year respectively. The trust will be releasing its fiscal fourth-quarter earnings on the evening of 27 May 2015, so investors can soon tell whether the trust has been able to keep up the momentum in its business-growth.

On 4 May 2015, FIL Ltd, an investment management firm, had sold 1.5 million units of the trust at an average price of S$1.06 each. FIL had previously bought 700,000 units of Religare Health Trust just a week back. But in any case, the most recent sale had brought FIL’s stake in Religare Health Trust down from 6.04% to 5.85%.

The trust last changed hands at S$1.04 on Wednesday. At that price, it is trading at a price-to-book ratio of 1.2 and has an annualised distribution yield of 6.9% (thanks to its total distributions of 5.43 cents per share for the nine months ended 31 December 2014).

2. Super Group Ltd (SGX: S10)

Established in 1987, Super Group was the firm that pioneered the 3-in-1 coffee concept with the belief that “tasty beverages should be convenient and affordable.” Today, the firm’s a leading instant food and beverage outfit with two business segments: Branded Consumer (BC) products and Food Ingredients (FI).

The BC segment mainly sees Super manufacture and distribute instant beverage products under its stable of brands which include Super, Owl, Gold Eagle, and more. Meanwhile, the production and distribution of food ingredients like soluble coffee powder and non-dairy creamer to other beverage manufacturers constitute the bulk of the company’s business in the FI segment.

All told, Super Group currently has over 150 products in its stable which are distributed to over 50 countries.

On 18 May 2015, The Capital Group Companies Inc., an owner of a U.S.-based investment management firm, had sold 422,600 shares of Super Group at the price of S$1.262 each. As a result of the sale, The Capital Group had seen its stake in Super Group decline slightly from 8.03% to 7.99%.

Based on its closing price of S$1.215 on Wednesday, the company is trading at 21 times its trailing earnings and sports a dividend yield of 2.55% (based on its dividend of S$0.031 per share in 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.