Solon Eiendom ASA acquires, develops, and sells residential real estate properties in Norway. Solon Eiendom is one of Norway’s some insider buying over the past three months, with insiders investing in 374,847 shares during this period. 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%. However, these signals may not be enough to gain conviction on whether to invest. I’ve assessed two potential reasons behind the insiders’ latest motivation to buy more shares.

See our latest analysis for Solon Eiendom

Which Insiders Are Buying?

More shares have been bought than sold by Solon Eiendom insiders in the past three months. In total, individual insiders own over 36 million shares in the business, which makes up around 67.52% of total shares outstanding. Insiders that have recently bought more shares are: Andreas Martinussen (management) , Edvin Austbo (board member) , Simen Thorsen (board member) and Tore Voldberg .

Is This Consistent With Future Growth?

At first glance, analysts’ earnings expectations of 557.35% over the next three years illustrates a very buoyant outlook for the business which is consistent with the signal company insiders are sending with their net buying activity. Probing further into annual growth rates,Solon Eiendom is believed to experience a large double-digit top-line growth over the next year, which is expected to drive significant expected earnings growth as well. This is potentially an outcome of successful growth initiatives in place and strong cost controls, leading to sustainable operations. Insiders recognising these benefits as defensible may ramp up their holdings in the company. Or they may simply deem the company as undervalued by the market based on the growth potential it will deliver.

Did Stock Price Volatility Instigate Buying?

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. In the past three months, Solon Eiendom’s share price reached a high of NOK25.95 and a low of NOK20.65. This indicates reasonable volatility with a change of 25.67%. Insiders’ purchases may not be driven by this movement but perhaps their view of the company’s growth in the future or simply their individual portfolio rebalancing.