2 Companies with Management 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 with leaders who have made purchases – in other words, putting more money where their mouth is – over the past month.

1. OSIM International Ltd  (SGX: O23)

OSIM, which runs a global retail network of more than 800 outlets across 30 countries, sells well-being and healthy lifestyle products such as its namesake massage products (think massage chairs and leg massagers) and health supplements.

The company also has its fingers in luxury tea products under the TWG Tea brand.

Ron Sim, the Chairman and Chief Executive of OSIM, had increased his holdings in the company recently by making a series of purchases starting on 20 August 2015 and ending on 2 September 2015.

Over that few weeks, Sim had purchased more than 3 million shares of OSIM to bring his ownership stake up from 65.6% to 66%.

OSIM closed at S$1.47 last Friday. At that price, the lifestyle products retailer is valued at 14 times its trailing earnings and has a historical dividend yield of 4% thanks to its annual dividend of S$0.06 per share in 2014.

2. Q & M Dental Group (Singapore) Limited (SGX: QC7)

From what was a single dental clinic in 1996, Q & M Dental Group has expanded steadily through the years to become a company with more than 60 local clinics today. Beyond Singapore, Q&M also has stakes in a number of dental-related businesses in Malaysia and China.

The dental healthcare services that Q&M Dental Group provides includes aesthetic dentistry, children’s dentistry, as well as orthodontics.

On 24 August 2015, Dr. Ng Chin Siau, the Founder and Chief Executive of Q & M Dental Group, had picked up 1.16 million shares of the company for S$696,000. That works out to be a average price of S$0.60 and the purchase has increased his total stake in the firm slightly from 49.24% to 49.39%.

Q&M Dental Group’s shares last changed hands at S$0.70 last Friday. The market has some high expectations on Q&M Dental Group’s future judging by the company’s high price-to-earnings ratio of 41 based on last Friday’s close.

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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.