Growthpoint Properties, Ltd., the largest South African real estate investment trust (REIT) company on the whole African continent, generated positive returns for investors after a delicate period of depreciated value. Growthpoint Properties is listed on the Johannesburg Stock Exchange (JSE), which is the largest stock market in Africa. The South Africa REIT has a portfolio of 440 directly owned properties in South Africa valued at R73.4 billion ($4.09 billion), including four hospitals and one medical chamber valued at R2.6 billion ($145 million) owned by Growthpoint Healthcare Property Holdings Limited. The company’s earnings have declined by 12.5% per year over the past 5 years. Indeed, the company encountered some difficulties and had trouble increasing its earnings. Nevertheless, some insider investors believed in the company and were convinced that it would bounce back. In the last 12 months, some of these insider investors began to buy large shares of the company, which sent a positive message to company’s shareholders, and increase the stock price.
The Group CEO & Executive Director Leon Sasse made the biggest insider purchase in the last 12 months. That single transaction was for R3.3 million ($167,412.99) worth of shares at a price of R11.79 each ($0.65). Insider investors purchase shares from the principles these shares are currently undervalued. This means that even though the company may be underperforming in the meantime, this underperformance is not perpetual. And eventually, the company’s true value will be reflected in its earnings, and consequently, its stock price will reflect that value. Hence insider investing encourages the company’s shareholders to take a long-term approach, which will keep them optimistic about the company. More importantly, what’s unique about insider investing is that the so-called insider investors in the company are the members of the Board of Directors. Thus, the shareholders who are not members of the Board of Directors, make their decisions to invest in the company based on what the directors of the company have been doing. Insider investing is also known as insider ownership because the investors are common shareholders rather than preferred shareholders, which means that they get paid last during the liquidation process of the company. Insider investing should not be confused with insider trading, which is the illegal practice of trading on the stock exchange to one’s own advantage through having access to confidential information.
Source: Yahoo Finance
Last year, more shares were bought than sold by insider investors. The data show that between the third and the sixth month, insider investors bought 33,647 shares and sold 27,749. And between the sixth and the ninth month, insider investors bought 621,885 shares and 571,598. These transactions increased the value of Growthpoint Properties. As the result, the stock price became one of the stocks to generate returns on the JSE.
Source: Simply Wall Street
Since March 22, the stock price of Growthpoint Properties has been on the rise. The stock price increased from R12.57 to R13.31. The financial position of Growthpoint Properties reassures its shareholders. The company holds more short-term and long-term assets than short-term and long-term liabilities. The company has R9.73 billion in short-term assets versus R4.4 billion in short-term liabilities and the has R158.43 billion in long-term assets versus R72.87 billion in long-term liabilities. These numbers show that the company is not underwater and still has a strong background to increase its revenues consistently in the future.