Yahoo Finance Why Did Cromwell Property Group’s’ (ASX:CMW) Insiders Buy Up More Shares?
Cromwell Property Group (ASX:CMW) is a Global Real Estate Investment Manager. Cromwell Property Group is one of Australia’s large-cap stocks that saw some insider buying over the past three months, with insiders investing in more than 70.86 million shares during this period. 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%. But these signals may not be sufficient to gain confidence on whether to invest. Today we will evaluate whether these decisions are bolstered by analysts’ expectations of future growth as well as recent share price movements. View out our latest analysis for Cromwell Property Group
Who Are The Insiders?
There were more Cromwell Property Group insiders that have bought shares than those that have sold. In total, individual insiders own over 36.67 million shares in the business, which makes up around 1.85% of total shares outstanding.
Is Future Growth Outlook As Bullish?
Analysts’ expectations for revenue growth over the next 3 years of -22.28% provides poor outlook for the company, however, this is contrary to the signal company insiders are sending with their net buying activity. Delving deeper into the line items, Cromwell Property Group is believed 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 -8.72%, 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?
Another factor we should consider is whether the timing of these insider transactions coincide with any significant share price movements. Volatility provides an opportunity to trade on market inefficiencies when the stock is under-priced compared to the stock’s intrinsic value. In the past three months, Cromwell Property Group’s share price reached a high of A$1.12 and a low of A$1.06. This suggests a trivial share price movement, with a change of 6.16%. Potentially, insider transactions are not share price related but may be due to their belief on what will happen to the company in the future or simply just personal portfolio rebalancing.
Next Steps:
Cromwell Property Group’s net buying tells us the stock is in favour with some insiders, however, earnings expectations tell a different story, and the relatively stable stock price may not warrant exploiting 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 important aspects you should further examine:
Financial Health: Does Cromwell Property Group 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 Cromwell Property Group? 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.
