L.G. Balakrishnan & Bros Insiders Benefitted From Selling Stock At ₹1,030

While L.G. Balakrishnan & Bros Limited (NSE:LGBBROSLTD) shareholders have had a good week with the stock up 14%, they shouldn't let their guards down. Although prices were relatively low, insiders chose to sell ₹9.0m worth of stock in the past 12 months. This could be a sign of impending weakness.

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.

See our latest analysis for L.G. Balakrishnan & Bros

The Last 12 Months Of Insider Transactions At L.G. Balakrishnan & Bros

The insider, Vijayshree Vijayakumar, made the biggest insider sale in the last 12 months. That single transaction was for ₹9.0m worth of shares at a price of ₹1,030 each. That means that an insider was selling shares at slightly below the current price (₹1,425). 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. This single sale was 100% of Vijayshree Vijayakumar's stake. Vijayshree Vijayakumar was the only individual insider to sell over the last year.

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 L.G. Balakrishnan & Bros better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. L.G. Balakrishnan & Bros insiders own about ₹11b worth of shares (which is 25% 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.

What Might The Insider Transactions At L.G. Balakrishnan & Bros Tell Us?

The fact that there have been no L.G. Balakrishnan & Bros insider transactions recently certainly doesn't bother us. While we feel good about high insider ownership of L.G. Balakrishnan & Bros, we can't say the same about the selling of shares. While it's good to be aware of 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. You'd be interested to know, that we found 1 warning sign for L.G. Balakrishnan & Bros and we suggest you have a look.

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 of direct interests only, but not derivative transactions or indirect interests.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com