Beijing Capital International Airport Company Limited engages in the aeronautical and non-aeronautical businesses at the Beijing Capital Airport in the People’s Republic of China. Beijing Capital International Airport’s insiders have invested more than 5 million shares in the large-cap stocks within the past three months. A well-known argument is that insiders investing more in their own companies’ shares sends an optimistic signal. The MIT Press (1998) published an article showing that stocks following insider buying outperformed the market by 4.5%. However, these signals may not be enough to gain conviction on whether to invest. I’ve analysed two possible reasons driving the insiders’ decision to ramp up their investment of late.
View our latest analysis for Beijing Capital International Airport
Which Insiders Are Buying?
There were more Beijing Capital International Airport insiders that have bought shares than those that have sold. In total, individual insiders own .
The entity that bought on the open market in the last three months was
Standard Life Investments Limited. Although this is an institutional investor, rather than a company executive or board member, the insights gained from direct access to management as a large investor would make it more well-informed than the average retail investor. In this specific instance, I would classify this investor as a company insider.
Is Future Growth Outlook As Bullish?
Analysts’ expectations for earnings over the next 3 years of 60.57% provides an upbeat outlook going forward which is consistent with the signal company insiders are sending with their net buying activity. Delving deeper into the line items,analysts anticipate a double-digit top-line growth over the next year, which seems to drive higher expected earnings growth as well. This is potentially an outcome of successful growth initiatives in place and strong cost controls, leading to sustainable operations. Insiders’ conviction in this strong performance is illustrated by their ramp up in shareholdings. Or they may merely believe the stock is undervalued by the market relative to the growth potential it will deliver.
Can Share Price Volatility Explain The Buy?
Alternatively, the timing of these insider transactions may have been driven by share price volatility. Volatility provides an opportunity to trade on market inefficiencies when the stock is under-priced compared to the stock’s intrinsic value. Within the past three months, Beijing Capital International Airport’s share price traded at a high of HK$13.16 and a low of HK$11.32. This suggests reasonable volatility with a change of 16.25%. This may not be large enough to warrant any significant purchases, therefore the underlying driver may be the insiders’ belief of company growth prospects or simply their personal portfolio rebalancing.