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 Dr. Lal PathLabs Limited (NSE:LALPATHLAB), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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.'
The Last 12 Months Of Insider Transactions At Dr. Lal PathLabs
In the last twelve months, the biggest single sale by an insider was when the CEO & Whole Time Director, Om Manchanda, sold ₹19m worth of shares at a price of ₹1,087 per share. That means that an insider was selling shares at slightly below the current price (₹1,244). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 1.2% of Om Manchanda's stake.
Happily, we note that in the last year insiders paid ₹607k for 550 shares. But insiders sold 57114 shares worth ₹61m. In total, Dr. Lal PathLabs insiders sold more than they bought over the last year. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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Insiders at Dr. Lal PathLabs Have Sold Stock Recently
We've seen more insider selling than insider buying at Dr. Lal PathLabs recently. In that time, insiders dumped ₹32m worth of shares. On the other hand we note Chief Human Resources Officer Manoj Garg bought ₹555k worth of shares. Generally this level of net selling might be considered a bit bearish.
Insider Ownership of Dr. Lal PathLabs
Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. It's great to see that Dr. Lal PathLabs insiders own 59% of the company, worth about ₹58b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The Dr. Lal PathLabs Insider Transactions Indicate?
Unfortunately, there has been more insider selling of Dr. Lal PathLabs stock, than buying, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. On the plus side, Dr. Lal PathLabs makes money, and is growing profits. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. Of course, the future is what matters most. So if you are interested in Dr. Lal PathLabs, you should check out this free report on analyst forecasts for the company.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
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 email@example.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.