Wing Tai Holdings Limited, an investment holding company, engages in property development, property investment, and retailing businesses in Singapore, Malaysia, the People’s Republic of China, and Australia. Wing Tai Holdings is one of Singapore’s large-cap stocks that saw some insider buying over the past three months, with insiders investing in more than 1.07 million shares during this period. A well-known argument is that insiders investing more in their own companies’ shares sends an optimistic signal. A two-decade research published in The MIT Press (1998) showed 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 will be analysing whether these buying activities are supported by favourable future outlook and recent share price volatility.
View our latest analysis for Wing Tai Holdings
Who Are The Insiders?
More shares have been bought than sold by Wing Tai Holdings insiders in the past three months. In total, individual insiders own over 13.44 million shares in the business, which makes up around 1.75% of total shares outstanding. . The entity that bought on the open market in the last three months was FMR LLC. 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 This Consistent With Future Growth?
From the outside, Wing Tai Holdings’s future looks optimistic. Digging deeper into the line items, analysts anticipate an impressive double-digit top-line growth next year, which has not been passed down into earnings expectations given its large negative growth. This illustrate high cost growth relative to incoming revenues, and could indicate a time of investment and growth in the company. This seems to be supported by insiders’ conviction evidenced by their net buying activities. Or else they may simply deem the company as undervalued by the market based on future growth it could produce.
Can Share Price Volatility Explain The Buy?
Another factor we should consider is whether the timing of these insider transactions coincide with any significant share price movements. This means, if insiders believe shares were heavily undervalued recently, this would provide a prime opportunity to buy more irrespective of its growth outlook. Wing Tai Holdings’s shares ranged between SGD2.16 and SGD1.89 over the past three months. This indicates a relatively insignificant share price movement, with a small change of 14.29%. Insiders’ purchases may not be driven by this movement but perhaps their view of the company’s growth in the future or simply their individual portfolio rebalancing.