We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 shareholders might well want to know whether insiders have been buying or selling shares in Minda Industries Limited (NSE:MINDAIND).
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, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
The Last 12 Months Of Insider Transactions At Minda Industries
The , Arijit Dutta, made the biggest insider sale in the last 12 months. That single transaction was for ₹33m worth of shares at a price of ₹427 each. That means that an insider was selling shares at around the current price of ₹388. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
In total, Minda Industries 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 Minda Industries Have Sold Stock Recently
We've seen more insider selling than insider buying at Minda Industries recently. In that time, insiders dumped ₹67m worth of shares. On the other hand we note Sanjay Jain bought ₹2.9m worth of shares, as previously mentioned. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.
Insider Ownership of Minda Industries
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Minda Industries insiders own 43% of the company, worth about ₹42b. 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 Minda Industries Insider Transactions Indicate?
The stark truth for Minda Industries is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But it is good to see that Minda Industries is growing earnings. 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 Minda Industries.
Of course Minda Industries may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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