How Many Insiders Sold ITC Limited (NSE:ITC) Shares?
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It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in ITC Limited (NSE:ITC).
What Is Insider Selling?
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, rules govern insider transactions, and certain disclosures are required.
We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
Check out our latest analysis for ITC
ITC Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Chairman Yogesh Deveshwar sold ₹91m worth of shares at a price of ₹304 per share. So we know that an insider sold shares at around the present share price of ₹274. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. We usually pause to reflect on the potential that a stock has a high valuation, if insiders have been selling at around the current price.
Happily, we note that in the last year insiders paid ₹3.2m for 15.00k shares. But insiders sold 21.26m shares worth ₹6.2b. Over the last year we saw more insider selling of ITC shares, than buying. The average sell price was around ₹291. It’s not too encouraging to see that insiders have sold at below the current price. Of course, the sales could be motivated for a multitude of reasons, so we shouldn’t jump to conclusions. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like ITC better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
ITC Insiders Are Selling The Stock
Over the last three months, we’ve seen significant insider selling at ITC. In total, insiders sold ₹683m worth of shares in that time, and we didn’t record any purchases whatsoever. In light of this it’s hard to argue that all the directors think that the shares are a bargain.
Insider Ownership of ITC
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. ITC insiders own 0.5% of the company, currently worth about ₹17b based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Do The ITC Insider Transactions Indicate?
Insiders haven’t bought ITC stock in the last three months, but there was some selling. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. On the plus side, ITC makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for ITC.
Of course ITC may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
