This Insider Has Just Sold Shares In City Union Bank Ltd. (NSE:CUB)

We note that a City Union Bank Ltd. (NSE:CUB) insider, K. Sridhar, recently sold ₹4.9m worth of stock for ₹162 per share. That might not be a huge sum but it was 71% of their personal holding, so we find it a little discouraging.

See our latest analysis for City Union Bank

City Union Bank Insider Transactions Over The Last Year

In fact, the recent sale by K. Sridhar was the biggest sale of City Union Bank shares made by an insider individual in the last twelve months, according to our records. That means that an insider was selling shares at slightly below the current price (₹180). 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. We note that the biggest single sale was 71% of K. Sridhar's holding.

Happily, we note that in the last year insiders paid ₹6.4m for 50.00k shares. But insiders sold 63.00k shares worth ₹10m. Over the last year we saw more insider selling of City Union Bank shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. City Union Bank insiders own about ₹7.9b worth of shares (which is 6.0% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The City Union Bank Insider Transactions Indicate?

Unfortunately, there has been more insider selling of City Union Bank stock, than buying, in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 4 warning signs for City Union Bank you should be aware of, and 1 of them doesn't sit too well with us.

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

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.

If you decide to trade City Union Bank, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.