Possible Bearish Signals With Minda Insiders Disposing Stock

Minda Corporation Limited (NSE:MINDACORP) shareholders might have a reason to worry after multiple insiders sold their shares over the last year. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, if numerous insiders are selling, shareholders should investigate more.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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Minda Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Additional Independent Director, Laxman Ramnarayan, for ₹39m worth of shares, at about ₹506 per share. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of ₹508. 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was 55% of Laxman Ramnarayan's holding.

Over the last year we saw more insider selling of Minda shares, than buying. 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!

View our latest analysis for Minda

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Insiders At Minda Have Sold Stock Recently

There was substantially more insider selling, than buying, of Minda shares over the last three months. We note Group CFO & Group Chief Risk Officer Vinod Raheja cashed in ₹22m worth of shares. On the other hand we note Group CFO & Group Chief Risk Officer Vinod Raheja bought ₹1.1m worth of shares , as previously mentioned . We don't view these transactions as a positive sign.

Insider Ownership Of Minda

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. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Minda insiders own 54% of the company, worth about ₹64b. 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 Does This Data Suggest About Minda Insiders?

Unfortunately, there has been more insider selling of Minda stock, than buying, in the last three months. Zooming out, the longer term picture doesn't give us much comfort. 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. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Every company has risks, and we've spotted 1 warning sign for Minda you should know about.

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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.