For TD Power Systems Insiders, Selling ₹108m Of Shares Was A Smart Move

Last week, TD Power Systems Limited's (NSE:TDPOWERSYS) stock jumped 18%, but insiders who sold ₹108m worth of stock in over the past year are likely to be in a better position. Selling at an average price of ₹282, which is higher than the current price, may have been the best move for these insiders because their investment would have been worth less now than when they sold.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for TD Power Systems

TD Power Systems Insider Transactions Over The Last Year

The insider, R. Murthy, made the biggest insider sale in the last 12 months. That single transaction was for ₹9.0m worth of shares at a price of ₹286 each. That means that even when the share price was below the current price of ₹352, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower 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 28% of R. Murthy's holding.

Insiders in TD Power Systems didn't buy any shares in the last year. You can see the insider transactions (by companies and individuals) 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!

If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.

Insiders At TD Power Systems Have Sold Stock Recently

The last quarter saw substantial insider selling of TD Power Systems shares. Specifically, insiders ditched ₹17m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership Of TD Power Systems

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. TD Power Systems insiders own 23% of the company, currently worth about ₹12b 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 Do The TD Power Systems Insider Transactions Indicate?

Insiders sold TD Power Systems shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. But since TD Power Systems is profitable and growing, we're not too worried by this. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. While we like knowing 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. While conducting our analysis, we found that TD Power Systems has 3 warning signs and it would be unwise to ignore them.

But note: TD Power Systems may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.

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

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.