Goodman Group is an integrated property group with operations throughout Australia, New Zealand, Asia, Europe, the United Kingdom, North America and Brazil. Goodman 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 23 million shares during this period. A well-known argument is that insiders investing more in their own companies’ shares sends an optimistic signal. A research published in The MIT Press (1998) concluded 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’ve analysed two possible reasons driving the insiders’ decision to ramp up their investment of late.

See our latest analysis for Goodman Group

Which Insiders Are Buying?

More shares have been bought than sold by Goodman Group insiders in the past three months. In total, individual insiders own over 42 million shares in the business, which makes up around 2.34% of total shares outstanding. Latest buying activities involved the following insiders: Ian Ferrier (board member) , James Sloman (board member) , Penny Winn and Rebecca McGrath (board member) .

The entity that bought on the open market in the last three months was

BlackRock Inc. State Street Global Advisors Inc.. 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’ earnings expectations of 28.89% over the next three years illustrates a good 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,Goodman Group is expected to experience negative growth in its top-line over the next year, which indicates the company may be facing some headwinds. However, next year’s earnings are expected to exhibit double-digit growth at 19.00% which may mean the company’s cost-cutting initiative will be significant enough to more than offset negative revenue growth. Insiders increasing their holding could show they have confidence in the company’s ability to continue growing. They may believe it is nearing the end of a turnaround or merely feel the market has discounted the stock too heavily, providing a prime opportunity to buy.