2 Companies with Insider and Substantial Shareholder Activity

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 in mind, let’s take a look at two companies with insider activity or substantial shareholder activity over the past two weeks.

1. Global Logistic Properties Ltd  (SGX: MC0)

Global Logistic Properties is one of the largest logistics infrastructure services providers in the region with business operations in China, Japan, Brazil, and the U.S. The firm’s currently the market leader in the first three countries in terms of having the largest completed land area for modern logistics facilities. In U.S., the company’s no slouch either as it’s in second place in the modern logistics market.

Global Logistic Properties caters to its clients’ logistical needs by acting as a “one-stop hub” for them to design and build their distribution networks across multiple markets. Global Logistic Properties’ strong customer base consists of firms like large manufacturers, retailers and e-commerce outfits such as, Adidas, and The Coca-Cola Company.

On 13 August 2015, Hillhouse Capital Management’s total deemed interest in Global Logistic Properties had inched up from 7.98% to 8.01%. This happened after two firms under Hillhouse Capital Management’s control, Gaoling Fund and YHG Investment, had bought a total of 1.3 million shares at around S$2.28 each on the open market.

The logistics outfit had closed at S$2.21 yesterday. At that price, it’s trading at 14.6 times its trailing earnings.

2. Yanlord Land Group Limited (SGX: Z25)

Yanlord Land is a real estate developer based in China which focuses on building residential, integrated, and commercial estates. In addition, its business operations also include investment holdings and property management services which help to generate additional and recurrent income.

On 17 August 2015, Yanlord Land had filed a disclosure for the share purchases that Zhong Sheng Jian, the Founder, Chairman, and Chief Executive of the company, had made:

  • 13 August – 500,000 shares for a total sum of S$499,700.
  • 13 August – 500,000 shares for a total sum of S$500,000.
  • 13 August – 703,600 shares for a total sum of S$703,389.
  • 14 August – 38,000 shares for a total sum of S$38,000.

As a result of that series of transactions, Zhong’s interest in Yanlord Land has grown slightly from 66.326% to 66.415%.

Shares of Yanlord Land last exchanged hands at S$1.05. The company’s valued at just 7 times its trailing earnings at that price.

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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.