2 Companies with Recent Insider 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.

With these as a backdrop, let’s take a look at two companies that have seen insiders either buy or sell shares recently.

1. Genting Singapore PLC (SGX: G13)

Genting Singapore’s primary business at the moment is its flagship integrated resort, Resorts World Sentosa. Within the resort lies an all-important casino (gaming revenue makes up three-quarters of the firm’s total revenue) along with other non-gaming attractions such as Universal Studios Singapore and the newly-opened Trick Eye Museum.

In a bid to drive future growth, the company’s currently developing an integrated resort in Jeju, South Korea that’s modelled after Resorts World Sentosa and slated for opening in 2017. On the local front, Genting Singapore had also recently launched its 557-room Genting Hotel Jurong in the Jurong Lake District of Singapore. Management sees the new hotel, Genting Singapore’s seventh, as playing an “important role” in helping to drive more visitors to Resorts World Sentosa.

On 15 May 2015, Lim Kok Hoong, an independent director of Genting Singapore, had sold 300,000 shares for a total sum of S$285,000. With that, his total stake in the firm has dwindled from 0.0099% to 0.0074%.

Genting Singapore last changed hands at S$0.93 on Monday. At that price, the integrated resort owner and operator is valued at nearly 33 times its trailing earnings.

2. Rotary Engineering Limited (SGX: R07)

Rotary Engineering earns its keep by offering engineering, procurement, and construction management (EPCM) services to the oil and gas, petroleum, petrochemical, and pharmaceutical industries.

The company might have a tiny market cap of S$292 million only, but it does have a sizeable workforce of more than 7,000 and conducts business in many part of Asia including Singapore, Malaysia, Thailand, India, the Middle East and others.

On 15 May 2015, Roger Chia Kim Piow, Chairman & Managing Director of Rotary Engineering, had bought 1.225 million shares at a price of around S$0.528 each. The transaction had pushed up his total stake in the firm from 35.11% to 35.33%.

Based on its closing price of S$0.515 on Monday, Rotary Engineering is valued at just 6.8 times its trailing earnings.

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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.