2 Companies with Managements 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 seen management buy shares, or in other words, put more money where their mouth is, over the past two weeks.

Japfa Ltd  (SGX: UD2)

Headquartered in Singapore with business interests in other Asian countries like Indonesia, China, India, Myanmar and Vietnam, Japfa is a leading agri-food company which covers the whole value chain of the food industry from breeding to milking and fattening, and then to the processing and distribution of meat and milk.

Japfa has been in business for over 40 years and is one of the largest poultry producers in Indonesia. The company’s also a leading premium milk producer in China. Some of its popular consumer food brands include Greenfields, So Yumm, and Real Good.

On 22 and 24 June 2015, Handojo Santosa @ Kang Kiem Han, the executive deputy chairman of Japfa, had indirectly bought a total of 1.752 million shares for a sum of slightly more than S$697,000. With the purchases, Santosa’s stake in the firm had stepped up slightly from 64.38 % to 64.48%.

Shares of Japfa last changed hands at S$0.375 each on Wednesday. Despite falling by more than half since its initial public offering (IPO) in August last year, the firm is still valued at nearly 20 times its trailing earnings.

EuroSports Global Ltd (SGX: 5G1)

EuroSports specializes in the distribution of ultra-luxury and luxury automobiles as well as the provision of related after-sales services. Some of the automobile brands which are distributed by the company include Lamborghini, Pagani, and Alfa Romeo.

Beyond the above, EuroSports also runs an automobile leasing operation and has a business involving the retail and distribution of luxury watches. The company entered the latter line in 2012 and has exclusive distributorship rights for the deLaCour brand of watches in several Asian countries.

On 24 June, Goh Kim San, executive chairman and chief executive officer of EuroSports, had acquired 650,000 shares of the company in the open market for a total sum of S$132,036. The move had pushed up his direct interest in the firm from 42.72% to 42.97%.

Eurosports last closed at S$0.196 on Wednesday and had made losses over the past 12 months.

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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.