Don't Ignore The Insider Selling In ASK Automotive

We wouldn't blame ASK Automotive Limited (NSE:ASKAUTOLTD) shareholders if they were a little worried about the fact that Kuldip Rathee, the Chairman & MD recently netted about ₹3.7b selling shares at an average price of ₹472. That's a big disposal, and it decreased their holding size by 12%, which is notable but not too bad.

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The Last 12 Months Of Insider Transactions At ASK Automotive

In fact, the recent sale by Kuldip Rathee was the biggest sale of ASK Automotive shares made by an insider individual in the last twelve months, according to our records. So it's clear an insider wanted to take some cash off the table, even below the current price of ₹495. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 12% of Kuldip Rathee's holding.

The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

See our latest analysis for ASK Automotive

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Does ASK Automotive Boast High 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. ASK Automotive insiders own 75% of the company, currently worth about ₹73b based on the recent share price. 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 ASK Automotive Insider Transactions Indicate?

An insider hasn't bought ASK Automotive stock in the last three months, but there was some selling. Looking to the last twelve months, our data doesn't show any insider buying. But since ASK Automotive is profitable and growing, we're not too worried by this. 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. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 4 warning signs for ASK Automotive (1 shouldn't be ignored!) that we believe deserve your full attention.

But note: ASK Automotive may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.