Bestway Global Holding Inc., an investment holding company, designs, develops, manufactures, and sells a range of outdoor leisure products primarily under the BESTWAY brand in Europe, North America, the People’s Republic of China, and internationally. Bestway Global Holding’s insiders have invested more than 3 million shares in the within the past three months. 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 will be analysing whether these buying activities are supported by favourable future outlook and recent share price volatility.
View our latest analysis for Bestway Global Holding
Which Insiders Are Buying?
There were more Bestway Global Holding insiders that have bought shares than those that have sold. In total, individual insiders own .
The entity that bought on the open market in the last three months was
Morgan Stanley Investment Banking and Brokerage Investments. 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 This Consistent With Future Growth?
Analysts’ expectations for earnings over the next 3 years of 21.79% provides a positive 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,Bestway Global Holding is believed to experience a strong double-digit revenue growth next year, which is expected to drive an earnings growth rate of 18.20%. Improved cost management and sustained high revenue growth could lead to higher earnings growth in the future. Insiders recognising these benefits as defensible may accumulate their shares in the company. Another reason could simply be they deem the shares under-priced given the growth potential the business could produce.
Did Stock Price Volatility Instigate Buying?
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. Within the past three months, Bestway Global Holding’s share price traded at a high of HK$4.02 and a low of HK$2.96. This indicates reasonably high share price volatility with a change of 35.81%. This movement could potentially be significant enough to warrant insiders to accrue their shares.