Sunflag Iron and Steel Company Limited (NSE:SUNFLAG) Insiders Increased Their Holdings

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 Sunflag Iron and Steel Company Limited (NSE:SUNFLAG).

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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'.

See our latest analysis for Sunflag Iron and Steel

The Last 12 Months Of Insider Transactions At Sunflag Iron and Steel

The Non-Executive Chairman Ravi Bhushan Satya Bhardwaj made the biggest insider purchase in the last 12 months. That single transaction was for ₹50m worth of shares at a price of ₹31.43 each. We do like to see buying, but this purchase was made at well below the current price of ₹44.50. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

You can see a visual depiction of insider transactions (by companies and 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!

Sunflag Iron and Steel is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Sunflag Iron and Steel Insiders Are Selling The Stock

The last quarter saw substantial insider selling of Sunflag Iron and Steel shares. In total, insider Charanjiv Dhawan dumped ₹3.7m 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 insiders think that the shares are a bargain.

Insider Ownership of Sunflag Iron and Steel

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 27% of Sunflag Iron and Steel shares, worth about ₹2.2b. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Sunflag Iron and Steel Insider Transactions Indicate?

An insider hasn't bought Sunflag Iron and Steel stock in the last three months, but there was some selling. In contrast, they appear keener if you look at the last twelve months. And insider ownership remains quite considerable. So we're happy to look past recent trading. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Every company has risks, and we've spotted 1 warning sign for Sunflag Iron and Steel you should know about.

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.

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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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