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 recently seen insiders buying more shares, or in other words, putting even more money where their mouth is.
1. OSIM International Ltd (SGX: O23)
OSIM International is perhaps best known for its high-end OSIM-brand of massage chairs. But beyond that, the company also has interests in the retail of nutritional supplements and luxury tea through Richlife/GNC and TWG Tea respectively.
This week, OSIM’s chairman and chief executive, Ron Sim Chye Hock, had bought shares on two separate occasions (23 November and 25 November). Sim had purchased 513,000 shares in total on those two days at a price of around S$1.07 each. With the purchase, Sim’s total stake in the firm had been bumped up from 68.08% to 68.16%.
OSIM last changed hands at S$1.055 and has fallen by more than 50% from a 52-week high of S$2.20 that was reached in December 2014. The company is currently valued at 12 times its trailing earnings and offers a juicy dividend yield of 5.56% (thanks to its dividend of S$0.06 in 2014).
2. Fragrance Group Limited (SGX: F31)
Fragrance Group is engaged in real estate development and the ownership and management of hotels. The company has had a track record of successfully launching and completing “more than 70 projects” across Singapore.
Koh Wee Meng, the chairman and chief executive of Fragrance Group, had bought a total of 450,000 shares of the company at around S$0.19 each over a five day spell from 16 November to 20 November. As a result of the trades, Koh’s total stake in Fragrance Group has been bumped up slightly from 85.226% to 85.233%.
Fragrance Group’s shares last traded at S$0.186 yesterday. At that price, the real estate developer is priced at 1.25 times its latest book value.
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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.