More Money In The Bank For Mahindra & Mahindra Insiders Who Divested ₹687m

Despite the fact that Mahindra & Mahindra Limited (NSE:M&M) stock rose 11% last week, insiders who sold ₹687m worth of stock in the previous 12 months are likely to be better off. Holding on to stock would have meant their investment would be worth less now than it was at the time of sale. Thus selling at an average price of ₹1,544, which is higher than the current price, may have been the best decision.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for Mahindra & Mahindra

The Last 12 Months Of Insider Transactions At Mahindra & Mahindra

In the last twelve months, the biggest single purchase by an insider was when insider Uma Malhotra bought ₹215m worth of shares at a price of ₹1,564 per share. We do like to see buying, but this purchase was made at well below the current price of ₹1,836. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

In the last twelve months insiders purchased 263.06k shares for ₹411m. But they sold 444.67k shares for ₹687m. Over the last year we saw more insider selling of Mahindra & Mahindra shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insiders At Mahindra & Mahindra Have Sold Stock Recently

There was substantially more insider selling, than buying, of Mahindra & Mahindra shares over the last three months. We note insiders cashed in ₹109m worth of shares. On the flip side, insider Ruka Prasad spent ₹93k on purchasing shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Mahindra & Mahindra insiders own about ₹18b worth of shares (which is 0.9% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Mahindra & Mahindra Insider Transactions Indicate?

The stark truth for Mahindra & Mahindra is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn't give us much comfort. But since Mahindra & Mahindra is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To help with this, we've discovered 3 warning signs (1 shouldn't be ignored!) that you ought to be aware of before buying any shares in Mahindra & Mahindra.

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 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.