2 Companies with Insider 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 with either insider activity or substantial shareholder activity over the past two weeks.

  1. Hong Fok Corporation Limited (SGX:H30)

Hong Fok is an investment company with its subsidiaries focused on property development or property investment in Singapore and Hong Kong. Some of the more popular projects under its portfolio include The Concourse, Jewel at Balmoral and International Plaza.

On 20th October 2015, Mr. Cheong Sim Eng, Joint Chairman and Managing Director of the firm, acquired 90,000 shares of Hong Fok for S$64,350. The average price is derived to be S$0.715. The transaction pushed up his total interest in the company from 17.042% to 17.054%.

At its closing price yesterday of S$0.73, Hong Fok traded at around 14.36 times trailing earnings with a dividend yield of 1.33%.

  1. Genting Singapore PLC (SGX:G13)

Genting Singapore is well known for its flagship integrated resort – Resorts World Sentosa. Spanning across 49 hectares, the resort has many attractions going for tourists and locals alike such as one of the world’s largest aquariums – S.E.A. Aquarium™, Southeast Asia’s only aquatic park integrated with marine life – Adventure Cove Waterpark™ and Southeast Asia’s first and only Universal Studios theme park – Universal Studios Singapore.

Genting Singapore is not resting on its laurels too. It opened a new 557-room hotel – Genting Hotel Jurong, so as to attract middle-class revellers and potential gaming clients. In addition, Resorts World™ Jeju, another integrated resort located in South Korea, is also under works and slated to open progressively from 2017.

On 23rd October, 2015, Mr. Tjong Yik Min, an independent director, disposed off 268,496 shares at an average price of S$0.85. With that, he has liquidated all the shares he held previously and has no more holdings in the company.

Genting Singapore last changed hands at S$0.855, carrying an elevated P/E ratio of 44.84 and 1.17% dividend yield.

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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.