Possible Bearish Signals With Mahindra & Mahindra Insiders Disposing Stock

Over the past year, many Mahindra & Mahindra Limited (NSE:M&M) insiders sold a significant stake in the company which may have piqued investors' interest. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, if numerous insiders are selling, shareholders should investigate more.

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.

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The Last 12 Months Of Insider Transactions At Mahindra & Mahindra

Over the last year, we can see that the biggest insider sale was by the MD, Group CEO, Anish Shah, for ₹211m worth of shares, at about ₹2,872 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of ₹3,013. 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. This single sale was just 37% of Anish Shah's stake.

In the last twelve months insiders purchased 1.35k shares for ₹3.7m. On the other hand they divested 384.71k shares, for ₹1.1b. In total, Mahindra & Mahindra insiders sold more 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. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Check out our latest analysis for Mahindra & Mahindra

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Mahindra & Mahindra Insiders Are Selling The Stock

The last quarter saw substantial insider selling of Mahindra & Mahindra shares. Specifically, insiders ditched ₹38m 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.

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. It's great to see that Mahindra & Mahindra insiders own 1.0% 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. And our longer term analysis of insider transactions didn't bring confidence, either. 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. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we've found that Mahindra & Mahindra has 2 warning signs (1 can't be ignored!) that deserve your attention before going any further with your analysis.

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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.