Yahoo Finance Why Did Storebrand ASA’s’ (OB:STB) Insiders Buy Up More Shares?
Storebrand ASA, through its subsidiaries, primarily provides insurance products and services for private individuals, companies, municipalities, and public sector in Norway and Sweden. Storebrand’s insiders have invested 126.15k 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. A two-decade research published in The MIT Press (1998) showed 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 Storebrand
Which Insiders Are Buying?
Over the past three months, more shares have been bought than sold by Storebrand’s’ insiders. In total, individual insiders own over 1.76 million shares in the business, which makes up around 0.38% of total shares outstanding.
Is Future Growth Outlook As Bullish?
On the surface, analysts’ earnings growth projection of -9.01% over the next three years provides negative outlook for the business, however, this is contrary to the signal company insiders are sending with their net buying activity. Probing further into annual growth rates, Storebrand is expected to experience negative growth in its top-line over the next year, which indicates the company may be facing some headwinds. This will likely flow through to its earnings next year with a growth of -10.96%, indicating cost-cutting may not be significant enough to pull it through into a positive growth region yet. 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?
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, Storebrand’s share price reached a high of NOK69.9 and a low of NOK62.82. This suggests a trivial share price movement, with a change of 11.27%. This could indicate insider transactions are not driven by share price changes but perhaps due to their belief of the company’s growth prospects or just personal portfolio re-weighting.
Next Steps:
Storebrand’s net buying tells us the stock is in favour with some insiders, although the expected earnings growth challenges this conclusion, 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. I’ve put together two key aspects you should further research:
Financial Health: Does Storebrand 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 Storebrand? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
