Should You Take Comfort From Insider Transactions At Elgi Rubber Company Limited (NSE:ELGIRUBCO)?

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Elgi Rubber Company Limited (NSE:ELGIRUBCO).

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. 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'.

View our latest analysis for Elgi Rubber

The Last 12 Months Of Insider Transactions At Elgi Rubber

There wasn't any very large single transaction over the last year, but we can still observe some trading.

Sudarsan Varadaraj purchased 59.17k shares over the year. The average price per share was ₹16.54. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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

Insider Ownership

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Elgi Rubber insiders own 60% of the company, currently worth about ₹855m based on the recent share price. 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 Do The Elgi Rubber Insider Transactions Indicate?

The fact that there have been no Elgi Rubber insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like Elgi Rubber insiders think the business has merit. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Elgi Rubber. To that end, you should learn about the 4 warning signs we've spotted with Elgi Rubber (including 1 which is concerning).

Of course Elgi Rubber 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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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. 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.
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