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Veidekke ASA operates as a construction and property development company in Norway, Sweden, and Denmark. Veidekke’s insiders have invested 681.57k shares in the large-cap stocks within the past three months. A well-known argument is that insiders investing more in their own companies’ shares sends an optimistic 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.
Check out our latest analysis for Veidekke
Which Insiders Are Buying?
Over the past three months, more shares have been bought than sold by Veidekke’s’ insiders. In total, individual insiders own less than one million shares in the business, or around 0.55% of total shares outstanding. Insiders that have recently bought more shares are: Ann-Christin Andersen (board member) and Hans von Uthmann (board member) This statement is created if only one individual insider bought company shares in past 3 months . The entity that bought on the open market in the last three months was Stiftelsen Veidekkeansattes Aksjekjøp. 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 Future Growth Outlook As Bullish?
At first glance, analysts’ earnings expectations of 96.96% over the next three years illustrates a fantastic outlook for the business which is consistent with the signal company insiders are sending with their net buying activity. Delving deeper into the line items, Veidekke is expected to experience a strong double-digit revenue growth next year, which is expected to drive significant expected earnings growth as well. This may mean the company is reaping meaningful benefits from past growth initiatives, placing it in a beneficial position for future profits. Insiders’ conviction in this strong performance is illustrated by their ramp up in shareholdings. Or they may merely believe the stock is undervalued by the market relative to the growth potential it will deliver.
Did Insiders Buy On Share Price Volatility?
An alternative reason for recent trades could be insiders taking advantage of the 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, Veidekke’s share price reached a high of NOK96.7 and a low of NOK75.8. This suggests some volatility with a share price change of of 27.57%. This movement is potentially meaningful enough to trade on if insiders believe the market has mispriced their companies’ shares.