For Sterling and Wilson Renewable Energy Insiders, Selling ₹768m Of Shares Was A Smart Move

Sterling and Wilson Renewable Energy Limited's (NSE:SWSOLAR) stock rose 12% last week, but insiders who sold ₹768m worth of stock over the last year are probably in a more advantageous position. Selling at an average price of ₹302, which is higher than the current price, may have been the wisest decision for these insiders as their investment would have been worth less now than when they sold.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Sterling and Wilson Renewable Energy

Sterling and Wilson Renewable Energy Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Non-Executive & Non-Independent Chairman, Khurshed Daruvala, for ₹450m worth of shares, at about ₹300 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of ₹562. 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 7.5% of Khurshed Daruvala's holding.

Sterling and Wilson Renewable Energy insiders didn't buy any shares over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Sterling and Wilson Renewable Energy Insiders Are Selling The Stock

The last three months saw significant insider selling at Sterling and Wilson Renewable Energy. In total, insiders dumped ₹13m 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

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Sterling and Wilson Renewable Energy insiders own about ₹13b worth of shares (which is 9.8% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Sterling and Wilson Renewable Energy Tell Us?

Insiders sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. It is good to see high insider ownership, but the insider selling leaves us cautious. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. While conducting our analysis, we found that Sterling and Wilson Renewable Energy has 1 warning sign and it would be unwise to ignore this.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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 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.