ARC Resources Ltd., together with its subsidiaries, acquires, explores, develops, and produces crude oil, natural gas, and natural gas liquids. ARC Resources’s insiders have invested 19,680 shares in the large-cap stocks within the past three months. It is widely considered that insider buying stock in their own companies is potentially a bullish signal. A two-decade research published in The MIT Press (1998) showed 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.See our latest analysis for ARC Resources
Who Are Ramping Up Their Shares?
There were more ARC Resources insiders that have bought shares than those that have sold. In total, individual insiders own over 2 million shares in the business, which makes up around 0.58% of total shares outstanding. Insiders that have recently ramped up their holdings are:
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Does Buying Activity Reflect Future Growth?
Analysts’ expectations for revenue growth over the next 3 years of 40.34% provides a decent 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,ARC Resources is expected to experience negative growth in its top-line over the next year, which indicates the company may be facing some headwinds. This is expected to impact its bottom line next year given the large negative growth rate expected, indicating cost-cutting may not be able to pull it through into a positive growth region yet. Although, insiders seem to know something the market does not and have been ramping up their holdings in times of uncertainty. This indicates they may see a turnaround or deem the stock to be over-penalized by negative market sentiment.
Can Share Price Volatility Explain The Buy?
Alternatively, the timing of these insider transactions may have been driven by share price volatility. A correlation could mean directors are trading on market inefficiencies based on their belief of the company’s intrinsic value. In the past three months, ARC Resources’s share price reached a high of CA$16.87 and a low of CA$12.43. This indicates reasonably high share price volatility with a change of 35.72%. This movement could potentially be significant enough to warrant insiders to accrue their shares.
ARC Resources’s insider meaningful buying activity tells us the shares are currently in favour, though negative growth in expected earnings contests this assumption, while a relatively volatile share price could be the motivation to trade. Although insider buying can be a useful prompt, following the lead of an insider, however, will never replace diligent research. there are two essential factors you should further research:
- 1. Financial Health: Does ARC Resources have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- 2. Other High Quality Alternatives : Are there other high quality stocks you could be holding instead of ARC Resources? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!