In This Article:
Beach Energy Limited explores, develops, produces, and sells oil, gas, and gas liquids. Beach Energy is one of Australia’s some insider buying over the past three months, with insiders investing in more than 67 million shares during this period. It is widely considered that insider buying stock in their own companies is potentially 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.
View our latest analysis for Beach Energy
Who Are Ramping Up Their Shares?
There were more Beach Energy insiders that have bought shares than those that have sold. In total, individual insiders own over 8 million shares in the business, which makes up around 0.33% of total shares outstanding. The insider that recently bought more shares is Joycelyn Morton (board member) .
The entity that bought on the open market in the last three months was
Paradice Investment Management Pty Ltd. Vinva Investment Management. 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?
On the surface, analysts’ earnings growth projection of -14.66% over the next three years provides negative outlook for the business, however, this is contrary to the signal company insiders are sending with their net buying activity. Probing further into annual growth rates,analysts anticipate a sizeable revenue growth over the next year, which is not expected to flow into its earnings given its negative growth of -19.36%. This indicates high levels of cost growth compared to revenues, which is typical during a period 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. 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, Beach Energy’s share price reached a high of A$1.81 and a low of A$1.21. This indicates a relatively high volatility with large change of 49.79%. Insiders may deem this relatively meaningful movement as an opportunity to increase their shareholdings.