In This Article:
China Oilfield Services Limited, together with its subsidiaries, provides integrated offshore oilfield services in Mainland China and internationally. China Oilfield Services is one of China’s large-cap stocks that saw some insider buying over the past three months, with insiders investing in more than 15 million shares during this period. Generally, insiders buying more shares in their own firm sends a bullish signal. A research published in The MIT Press (1998) concluded 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. I’ve assessed two potential reasons behind the insiders’ latest motivation to buy more shares.
View our latest analysis for China Oilfield Services
Who Are The Insiders?
There were more China Oilfield Services insiders that have bought shares than those that have sold. In total, individual insiders own over 4 million shares in the business, which makes up around 0.09% of total shares outstanding. .
The entity that bought on the open market in the last three months was
BlackRock Inc. Platinum Investment Management 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?
At first glance, analysts’ revenue growth expectations of 31.55% over the next three years illustrates a satisfactory outlook for the company which is consistent with the signal company insiders are sending with their net buying activity. Probing further into annual growth rates,analysts anticipate a strong double-digit revenue growth next year, which Insiders who believe in higher future growth could increase their shareholdings, signalling conviction in the company strategy. However, this net buying may simply reflect their views that the share price is well-below its intrinsic value.
Did Stock Price Volatility Instigate Buying?
An alternative reason for recent trades could be insiders taking advantage of the share price volatility. A correlation could mean directors are trading on market inefficiencies based on their belief of the company’s intrinsic value. China Oilfield Services’s shares ranged between HK$9.01 and HK$7.16 over the past three months. This indicates reasonable volatility with a change of 25.84%. 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.