As Action Construction Equipment Limited's (NSE:ACE) market cap increased ₹3.3b, insiders who bought last year may be reflecting on buying more

By
Simply Wall St
Published
September 02, 2021
NSEI:ACE
Source: Shutterstock

Insiders who bought Action Construction Equipment Limited (NSE:ACE) stock in the last 12 months were richly rewarded last week. The company's market value increased by ₹3.3b as a result of the stock's 13% gain over the same period. As a result, their original purchase of ₹21m worth of stock is now worth ₹68m.

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.

View our latest analysis for Action Construction Equipment

Action Construction Equipment Insider Transactions Over The Last Year

The Chairman & MD Vijay Agarwal made the biggest insider purchase in the last 12 months. That single transaction was for ₹6.9m worth of shares at a price of ₹67.30 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of ₹247. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

Vijay Agarwal bought 276.26k shares over the last 12 months at an average price of ₹74.32. 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!

insider-trading-volume
NSEI:ACE Insider Trading Volume September 3rd 2021

Action Construction Equipment is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insiders at Action Construction Equipment Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Action Construction Equipment. In total, insiders dumped ₹6.0m 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.

Insider Ownership of Action Construction Equipment

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. Action Construction Equipment insiders own 76% of the company, currently worth about ₹21b based on the recent share price. 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 Action Construction Equipment Insiders?

Insiders haven't bought Action Construction Equipment stock in the last three months, but there was some selling. But we take heart from prior transactions. On top of that, insiders own a significant portion of the company. So we're not too bothered by recent selling. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Action Construction Equipment. Every company has risks, and we've spotted 2 warning signs for Action Construction Equipment you should know about.

Of course Action Construction Equipment may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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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