Mahindra & Mahindra Insiders Sell ₹1.1b Of Stock, Possibly Signalling Caution

Many Mahindra & Mahindra Limited (NSE:M&M) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Mahindra & Mahindra

Mahindra & Mahindra Insider Transactions Over The Last Year

The MD, Group CEO, Anish Shah, made the biggest insider sale in the last 12 months. That single transaction was for ₹211m worth of shares at a price of ₹2,872 each. That means that even when the share price was below the current price of ₹2,990, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was only 37% of Anish Shah's holding.

Happily, we note that in the last year insiders paid ₹3.7m for 1.35k shares. But insiders sold 401.60k shares worth ₹1.1b. All up, insiders sold more shares in Mahindra & Mahindra than they bought, over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

I will like Mahindra & Mahindra better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Mahindra & Mahindra Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at Mahindra & Mahindra. In total, insiders sold ₹292m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Does Mahindra & Mahindra 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. It's great to see that Mahindra & Mahindra insiders own 0.9% of the company, worth about ₹32b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At Mahindra & Mahindra Tell Us?

Insiders haven't bought Mahindra & Mahindra stock in the last three months, but there was some selling. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But since Mahindra & Mahindra 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. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Mahindra & Mahindra. Every company has risks, and we've spotted 3 warning signs for Mahindra & Mahindra (of which 1 is significant!) you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 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.