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Should You Take Comfort From Insider Transactions At Brooks Laboratories Limited (NSE:BROOKS)?

Simply Wall St

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Brooks Laboratories Limited (NSE:BROOKS), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.

We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

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Check out our latest analysis for Brooks Laboratories

The Last 12 Months Of Insider Transactions At Brooks Laboratories

While no particular insider transaction stood out, we can still look at the overall trading.

Happily, we note that in the last year insiders bought 425k shares for a total of ₹4.8m. Brooks Laboratories may have bought shares in the last year, but they didn't sell any. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

NSEI:BROOKS Recent Insider Trading, May 24th 2019

Brooks Laboratories is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Brooks Laboratories Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Brooks Laboratories. In total, insiders bought ₹4.8m worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.

Does Brooks Laboratories Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Brooks Laboratories insiders own 66% of the company, worth about ₹543m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Brooks Laboratories Tell Us?

It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss last year, which makes us a little cautious. When combined with notable insider ownership, these factors suggest Brooks Laboratories insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free .

Of course Brooks Laboratories may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.