Possible Bearish Signals With TD Power Systems Insiders Disposing Stock

TD Power Systems Limited (NSE:TDPOWERSYS) shareholders might have a reason to worry after multiple insiders sold their shares over the last year. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, if numerous insiders are selling, shareholders should investigate more.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for TD Power Systems

The Last 12 Months Of Insider Transactions At TD Power Systems

In the last twelve months, the biggest single sale by an insider was when the COO & Head of SBU 2, Ramakrishna Varna, sold ₹10m worth of shares at a price of ₹341 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of ₹370. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 8.1% of Ramakrishna Varna's holding.

TD Power Systems 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. By clicking on the graph below, you can see the precise details of each insider transaction!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Insiders At TD Power Systems Have Sold Stock Recently

The last quarter saw substantial insider selling of TD Power Systems shares. In total, insiders dumped ₹37m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Does TD Power Systems Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company 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. It's great to see that TD Power Systems insiders own 20% of the company, worth about ₹12b. 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. And there weren't any purchases to give us comfort, over the last year. 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. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing TD Power Systems. To that end, you should learn about the 3 warning signs we've spotted with TD Power Systems (including 1 which can't be ignored).

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.