We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Axis Bank Limited (NSE:AXISBANK), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
Axis Bank Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the , Shikha Sharma, sold ₹66m worth of shares at a price of ₹661 per share. So it’s clear an insider wanted to take some cash off the table, even below the current price of ₹764. We generally consider it a negative if insiders have been selling on market, 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. We note that the biggest single sale was only 17.4% of Shikha Sharma’s holding.
In the last twelve months insiders purchased 86050 shares for ₹31m. On the other hand they divested 2.4m shares, for ₹1.5b. All up, insiders sold more shares in Axis Bank than they bought, over the last year. The average sell price was around ₹636. It’s not particularly great to see insiders were selling shares at below recent prices. Since insiders sell for many reasons, we wouldn’t put too much weight on it. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
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Insiders at Axis Bank Have Sold Stock Recently
Over the last three months, we’ve seen significant insider selling at Axis Bank. In total, insiders sold ₹360m 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 Axis Bank 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. I reckon it’s a good sign if insiders own a significant number of shares in the company. Axis Bank insiders own about ₹9.3b worth of shares (which is 0.5% 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 Does This Data Suggest About Axis Bank Insiders?
Insiders sold Axis Bank shares recently, but they didn’t buy any. And our longer term analysis of insider transactions didn’t bring confidence, either. It is good to see high insider ownership, but the insider selling leaves us cautious. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Axis Bank.
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If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.