Possible Bearish Signals With Mahindra & Mahindra Insiders Disposing Stock

The fact that multiple Mahindra & Mahindra Limited (NSE:M&M) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. 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.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Mahindra & Mahindra

The Last 12 Months Of Insider Transactions At Mahindra & Mahindra

The insider Uma Malhotra made the biggest insider purchase in the last 12 months. That single transaction was for ₹215m worth of shares at a price of ₹1,564 each. That means that even when the share price was higher than ₹1,558 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Happily, we note that in the last year insiders paid ₹414m for 265.00k shares. But they sold 440.57k shares for ₹652m. All up, insiders sold more shares in Mahindra & Mahindra than they bought, over the last year. 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!

I will like Mahindra & Mahindra better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Insiders At Mahindra & Mahindra Have Sold Stock Recently

The last quarter saw substantial insider selling of Mahindra & Mahindra shares. In total, insiders dumped ₹39m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

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. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Mahindra & Mahindra insiders own 0.8% of the company, worth about ₹14b. 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 sold Mahindra & Mahindra shares recently, but they didn't buy any. And our longer term analysis of insider transactions didn't bring confidence, either. On the plus side, Mahindra & Mahindra makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. 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. Our analysis shows 3 warning signs for Mahindra & Mahindra (2 can't be ignored!) and we strongly recommend you look at them before investing.

Of course Mahindra & Mahindra 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 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.