SG Fleet Group Limited, together with its subsidiaries, provides fleet management and leasing services in Australia, New Zealand, and the United Kingdom. SG Fleet Group is one of Australia’s large-cap stocks that saw some insider buying over the past three months, with insiders investing in more than 7 million shares during this period. Generally, insiders buying more shares in their own firm sends a bullish signal. The MIT Press (1998) published an article showing that stocks following insider buying outperformed the market by 4.5%. But these signals may not be sufficient to gain confidence on whether to invest. Today we will evaluate whether these decisions are bolstered by analysts’ expectations of future growth as well as recent share price movements.
Check out our latest analysis for SG Fleet Group
Which Insiders Are Buying?
Over the past three months, more shares have been bought than sold by SG Fleet Group’s’ insiders. In total, individual insiders own over 21 million shares in the business, which makes up around 8.18% of total shares outstanding. .
The entity that bought on the open market in the last three months was
Pengana Capital Ltd. Super Group Limited Washington H. Soul Pattinson and Company 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?
At first glance, analysts’ earnings expectations of 35.70% over the next three years illustrates 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,SG Fleet Group is expected to experience a double-digit top-line growth over the next year, which is expected to drive an earnings growth rate of 13.77%. High levels of sustained revenue growth as well as improved cost management could see higher levels of future earnings. Insiders recognising these benefits as defensible may accumulate their shares in the company. Another reason could simply be they deem the shares under-priced given the growth potential the business could produce.
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. Within the past three months, SG Fleet Group’s share price traded at a high of A$4.49 and a low of A$3.97. This indicates a relatively insignificant share price movement, with a small change of 13.1%. Potentially, insider transactions are not share price related but may be due to their belief on what will happen to the company in the future or simply just personal portfolio rebalancing.