intu owns and manages some of the best shopping centres, in some of the strongest locations, in the UK and Spain. intu properties is one of United Kingdom’s large-cap stocks that saw some insider buying over the past three months, with insiders investing in more than 82 million shares during this period. 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%. 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.See our latest analysis for intu properties
Which Insiders Are Buying?
There were more intu properties insiders that have bought shares than those that have sold. In total, individual insiders own over 348 million shares in the business, which makes up around 25.88% of total shares outstanding. The entity that bought on the open market in the last three months was BlackRock Inc. BMO Global Asset Management BNP Paribas Private & Investment Banking Investments BNPP Asset Management Holding Coronation Asset Management Proprietary Ltd. Deutsche Asset & Wealth Management Deutsche Bank Private Banking and Investment Banking Investments GAM Holding AG HSBC Global Asset Management (UK) Limited J.P. Morgan Asset Management Inc. JPMorgan Chase & Co Brokerage and Securities Investments Legal & General Investment Management Limited M&G Investment Management Limited Merrill Lynch & Co. Inc. Banking Investments Morgan Stanley Investment Management Inc. Old Mutual Global Investors RMB Morgan Stanley (Pty) Ltd Asset Management Arm Royal London Asset Management Limited Standard Life Aberdeen plc State Street Global Advisors Inc. 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.
Does Buying Activity Reflect Future Growth?
Analysts’ expectations for revenue growth over the next 3 years of -8.07% provides negative outlook for the business, however, this is contrary to the signal company insiders are sending with their net buying activity. Digging deeper into the line items,intu properties is believed 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, implying cost management may not be effective enough to bring the company into positive earnings growth. However, company insiders appear to know something the market doesn’t and have been investing more money into the stock. This may mean they believe in a turnaround or believe the stock is well-undervalued by negative market sentiment.
Can Share Price Volatility Explain The Buy?
An alternative reason for recent trades could be insiders taking advantage of the 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. intu properties’s shares ranged between £2.28 and £1.94 over the past three months. This indicates some volatility with a share price change of of 17.42%. 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.
intu properties’s net buying tells us the stock is in favour with some insiders, however, earnings expectations tell a different story, and the share price movement may be too trivial to cash in on any mispricing. However, while insider transactions could be a helpful signal, it is definitely not sufficient on its own to make an investment decision. there are two important aspects you should further examine:
- Financial Health: Does intu properties 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.
- Other High Quality Alternatives : Are there other high quality stocks you could be holding instead of intu properties? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!