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Wenzhou Kangning Hospital Co., Ltd. operates and manages a network of healthcare facilities in the People’s Republic of China. Wenzhou Kangning Hospital’s insiders have invested 40,600 shares in the within the past three months. A well-known argument is that insiders investing more in their own companies’ shares sends an optimistic signal. The MIT Press (1998) published an article showing 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 Wenzhou Kangning Hospital
Who Are Ramping Up Their Shares?
There were more Wenzhou Kangning Hospital insiders that have bought shares than those that have sold. In total, individual insiders own over 26 million shares in the business, which makes up around 35.79% of total shares outstanding. .
The entity that bought on the open market in the last three months was
UBS Asset 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.
Is This Consistent With Future Growth?
At first glance, analysts’ revenue growth expectations of 16.94% over the next three years illustrates a tamed outlook moving forward, however, insiders may be more optimistic than the market, with their net buying activity. Delving deeper into the line items,analysts anticipate negative growth in its top-line over the next year, which indicates the company may be facing some headwinds. Although, expected high double-digit earnings growth could indicate the company’s cost controls will show meaningful results, offsetting the fall in revenue growth. Insiders may have confidence in these cost initiatives, or believe the market has overly penalized the company’s shares, leading to an opportune time to buy.
Did Insiders Buy On Share Price Volatility?
An alternative reason for recent trades could be insiders taking advantage of the share price volatility. This means, if insiders believe shares were heavily undervalued recently, this would provide a prime opportunity to buy more irrespective of its growth outlook. Wenzhou Kangning Hospital’s shares ranged between HK$41.25 and HK$36 over the past three months. This suggests an immaterial change in share price, with a movement of 14.58%. 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.