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 before you buy or sell NRB Bearings Limited (NSE:NRBBEARING), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a 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 it is perfectly logical to keep tabs on what insiders are doing. For example, a Colombia 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’.
NRB Bearings Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Trilochan Sahney for ₹163m worth of shares, at about ₹163 per share. So it’s clear an insider wanted to take some cash off the table, even below the current price of ₹202. While their view may have changed since they sold, this isn’t a particularly bullish sign. As a general rule we consider it to be discouraging when insiders are selling below the current price. It is worth noting that this sale was only 2.9% of Trilochan Sahney’s holding.
In the last twelve months insiders purchased 78.15k shares for ₹12m. On the other hand they divested 1.62m shares, for ₹270m. All up, insiders sold more shares in NRB Bearings than they bought, over the last year. The sellers received a price of around ₹166, on average. We don’t gain confidence from insider selling below the recent share price. Of course, the sales could be motivated for a multitude of reasons, so we shouldn’t jump to conclusions. You can see the insider transactions over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
NRB Bearings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Insiders at NRB Bearings Have Bought Stock Recently
It’s good to see that NRB Bearings insiders have made notable investments in the company’s shares. Not only was there no selling that we can see, but they collectively bought ₹7.8m worth of shares. This makes one think the business has some good points.
Insider Ownership of NRB Bearings
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. NRB Bearings insiders own about ₹3.6b worth of shares (which is 18% 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 NRB Bearings Insiders?
The recent insider purchases are heartening. However, the longer term transactions are not so encouraging. The high levels of insider ownership, and the recent buying by some insiders, suggests they are well aligned and optimistic. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.