En este artículo:
Metallurgical Corporation of China Ltd., together with its subsidiaries, engages in the engineering contracting, property development, equipment manufacture, and resource development businesses in China and internationally. Metallurgical of China’s insiders have invested more than 94.82 million shares in the large-cap stocks within the past three months. 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. I’ve analysed two possible reasons driving the insiders’ decision to ramp up their investment of late.
Check out our latest analysis for Metallurgical of China
Who Are Ramping Up Their Shares?
More shares have been bought than sold by Metallurgical of China insiders in the past three months. In total, individual insiders own less than one million shares in the business, or around 0.0036% of total shares outstanding. . The entity that bought on the open market in the last three months was BlackRock 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.
Does Buying Activity Reflect Future Growth?
On the surface, analysts’ earnings growth projection of 107% over the next three years provides a fantastic outlook for the business which is consistent with the signal company insiders are sending with their net buying activity. Digging deeper into the line items, Metallurgical of China is expected to experience a double-digit top-line growth over the next year, which seems to drive higher expected earnings growth as well. This is potentially an outcome of successful growth initiatives in place and strong cost controls, leading to sustainable operations. If insiders recognised this, a signal of their confidence may be their higher shareholdings in the company. Or they may simply view the share price is currently too low compared to the share’s intrinsic value.
Did Stock Price Volatility Instigate Buying?
Alternatively, the timing of these insider transactions may have been driven by share price volatility. 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, Metallurgical of China’s share price traded at a high of HK$2.53 and a low of HK$2.09. This suggests reasonable volatility with a change of 21.05%. This movement could potentially be significant enough to warrant insiders to accrue their shares.