2 Companies with Insider Activity

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 insider activity over the past two weeks.

1. M1 Ltd (SGX: B2F)

M1 is the smallest company within Singapore’s telecommunications sector behind Singapore Telecommunications Limited (SGX: Z74) and StarHub Ltd (SGX: CC3).

As a telco, M1 derives its revenue from four main business segments, namely, mobile services, fixed services, international services, and handset sales.

On 15 December 2015, Karen Kooi Lee Wah, M1’s chief executive, had sold 150,000 shares of the firm for a total sum of S$402,000, which works out to an average share price of S$2.68. With that, her interest in M1 had slid from 0.117% to 0.101%.

Notably, Kooi had sold her shares after M1 had fallen by nearly a third from a 52-week high of S$3.99 that was reached in the first-quarter of 2015. Could Kooi’s sale reflect a possible lack of confidence in the firm’s prospects? That is something prospective and current investors of the firm may want to think about.

M1 last changed hands at S$2.66. At that price, it is valued at 14 times trailing earnings and offers a juicy 7.2% dividend yield thanks to its dividend of S$0.189 per share in 2014.

2. Marco Polo Marine Ltd (SGX: 5LY)

Marco Polo Marine is in the business of owning and chartering ships, and building and repairing sea-faring vessels. The firm conducts its business internationally, in countries such as Indonesia, Thailand, Malaysia, Australia, and Singapore.

Recently, the spotlight has been on Marco Polo Marine after it became embroiled in a contract dispute with oil-rig builder SembCorp Marine Ltd (SGX: S51) in November. You can find out more about the issue in here.

Lee Wan Tang, Marco Polo Marine’s executive chairman, seems unfazed with his firm’s tussle with SembCorp Marine. From 11 December to 23 December 2015, Lee’s investment vehicle Nautical International Holdings, had bought a total of 3.348 million shares of Marco Polo Marine for nearly S$640,000 over four days. As a result of the transactions, Lee’s total interest in the firm had stepped up from 60.596% to 61.591%.

Marco Polo Marine closed trading last week at S$0.22 per share.  At that price, the shipping outfit is valued at 9 times trailing earnings.

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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.