While it’s been a great week for ICICI Bank Limited (NSE:ICICIBANK) shareholders after stock gained 6.1%, they should consider it with a grain of salt. Even though stock prices were relatively low, insiders elected to sell ₹6.4b worth of stock in the last year, which could indicate some expected downturn.
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.
The Last 12 Months Of Insider Transactions At ICICI Bank
The insider, Sriram Hariharan, made the biggest insider sale in the last 12 months. That single transaction was for ₹397m worth of shares at a price of ₹705 each. That means that even when the share price was slightly below the current price of ₹708, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was 50% of Sriram Hariharan's holding.
In the last twelve months insiders purchased 17.11k shares for ₹9.3m. But they sold 9.24m shares for ₹6.4b. In total, ICICI Bank insiders sold more than they bought over the last year. The sellers received a price of around ₹696, on average. It's not too encouraging to see that insiders have sold at below the current price. Since insiders sell for many reasons, we wouldn't put too much weight on it. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like ICICI Bank better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insider Ownership of ICICI Bank
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. ICICI Bank insiders own about ₹11b worth of shares (which is 0.2% 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 ICICI Bank Insiders?
The fact that there have been no ICICI Bank insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of ICICI Bank, we can't say the same about the selling of shares. Therefore, you should definitely take a look at this FREE report showing analyst forecasts for ICICI Bank.
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, but not derivative transactions.
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.