We wouldn’t blame IDFC First Bank Limited (NSE:IDFCFIRSTB) shareholders if they were a little worried about the fact that V. Vaidyanathan, the MD, CEO & Director recently netted about ₹356m selling shares at an average price of ₹20.62. That sale reduced their total holding by 41% which is hardly insignificant, but far from the worst we’ve seen.
The Last 12 Months Of Insider Transactions At IDFC First Bank
Notably, that recent sale by V. Vaidyanathan is the biggest insider sale of IDFC First Bank shares that we’ve seen in the last year. That means that an insider was selling shares at around the current price of ₹20.60. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.
Happily, we note that in the last year insiders paid ₹145m for 3.44m shares. But they sold 21547902 shares for ₹532m. Over the last year we saw more insider selling of IDFC First Bank shares, than buying. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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Insider Ownership of IDFC First 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. I reckon it’s a good sign if insiders own a significant number of shares in the company. IDFC First Bank insiders own about ₹1.9b worth of shares. That equates to 1.9% of the company. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At IDFC First Bank Tell Us?
The stark truth for IDFC First Bank is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. 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 we like knowing 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. In terms of investment risks, we’ve identified 3 warning signs with IDFC First Bank and understanding these should be part of your investment process.
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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, but not derivative transactions.
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