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Spark Infrastructure Group is a publicly owned investment manager. Spark Infrastructure Group is one of Australia’s some insider buying over the past three months, with insiders investing in more than 26 million shares during this period. It is widely considered that insider buying stock in their own companies is potentially a bullish signal. A two-decade research published in The MIT Press (1998) showed that stocks following insider buying outperformed the market by 4.5%. However, it may not be sufficient to base your investment decision merely on these signals. Today we will evaluate whether these decisions are bolstered by analysts’ expectations of future growth as well as recent share price movements.
View our latest analysis for Spark Infrastructure Group
Who Are Ramping Up Their Shares?
Over the past three months, more shares have been bought than sold by Spark Infrastructure Group’s’ insiders. In total, individual insiders own less than one million shares in the business, or around 0.05% of total shares outstanding. The following insiders have recently increased their company holdings: Gregory John Martin (management and board member) , Karen Lee Penrose (board member) and Richard Francis (board member) .
The entity that bought on the open market in the last three months was
Investors Mutual 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.
Does Buying Activity Reflect Future Growth?
Analysts’ expectations for earnings over the next 3 years of 38.67% provides a strong outlook going forward which is consistent with the signal company insiders are sending with their net buying activity. Probing further into annual growth rates,analysts anticipate decline in top-line growth next year, which could imply some headwinds going forward. Though, next year’s expected earnings growth of 13.66% could mean the company’s cost-cutting initiative will be significant enough to more than offset negative revenue growth. Insiders increasing their holding could show they have confidence in the company’s ability to continue growing. They may believe it is nearing the end of a turnaround or merely feel the market has discounted the stock too heavily, providing a prime opportunity to buy.
Did Stock Price Volatility Instigate Buying?
Another factor we should consider is whether the timing of these insider transactions coincide with any significant share price movements. Volatility provides an opportunity to trade on market inefficiencies when the stock is under-priced compared to the stock’s intrinsic value. In the past three months, Spark Infrastructure Group’s share price reached a high of A$2.39 and a low of A$2.16. This indicates an immaterial change in share price, with a movement of 10.65%. This could indicate insider transactions are not driven by share price changes but perhaps due to their belief of the company’s growth prospects or just personal portfolio re-weighting.