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. Though, it must be noted 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 that has seen recent insider or substantial shareholder activity.

1. Boustead Projects Ltd  (SGX: AVM)

Boustead Projects became a stand-alone listed company earlier this year after it was spun-off from Boustead Singapore Limited (SGX: F9D).

Boustead Projects focuses on the planning, designing, and construction of industrial facilities regionally in Singapore, Malaysia, China, and Vietnam.

On 17 August 2015, Wong Fong Fui, the Chairman & Group Chief Executive Officer of Boustead Singapore, had bought 6.77 million shares of Boustead Projects for a total sum of S$5.145 million. This purchase comes after Boustead Projects’ share price had fallen by nearly a quarter from the close of its first trading day on 30 April 2015 to 17 August 2015.

Wong’s total interest in Boustead Projects had been pushed up slightly from 67.67% to 69.79% as a result of the transaction.

Boustead Projects is currently trading at S$0.735 and is valued at 10 times its historical earnings.

2. Yoma Strategic Holdings Ltd  (SGX: Z59)

Yoma Strategic can be said to offer investors a direct exposure to Myanmar’s economic growth given that the firm has business interests in the country spanning a wide range of sectors from real estate to automotive and luxury travel to agriculture.

On 17 August 2015, Pun Chi Tung Melvyn, Yoma Strategic’s Chief Executive Officer, had bought 1 million shares of the company at S$0.367 apiece. The purchase had bumped up his stake in the firm slightly from 0.12% to 0.17%.

Yoma Strategic Holdings last changed hands at S$0.36 each. At that price, the mini conglomerate is valued at 19 times its trailing earnings.

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.