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 we'll take a look at whether insiders have been buying or selling shares in Vikas Multicorp Limited (NSE:VIKASMCORP).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.
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 Columbia 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'.
View our latest analysis for Vikas Multicorp
The Last 12 Months Of Insider Transactions At Vikas Multicorp
In the last twelve months, the biggest single sale by an insider was when the Non-Executive Director, Vikas Garg, sold ₹28m worth of shares at a price of ₹2.82 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of ₹3.95. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 4.9% of Vikas Garg's holding.
We note that in the last year insiders divested 39453990 shares for a total of ₹136m. In the last year Vikas Multicorp insiders didn't buy any company stock. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Vikas Multicorp better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Vikas Multicorp Insiders Are Selling The Stock
The last three months saw significant insider selling at Vikas Multicorp. In total, Non-Executive Director Vikas Garg sold ₹49m 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 of Vikas Multicorp
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Vikas Multicorp insiders own 58% of the company, worth about ₹1.5b. 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 Does This Data Suggest About Vikas Multicorp Insiders?
An insider sold Vikas Multicorp shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. But it is good to see that Vikas Multicorp is growing earnings. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. I like to dive deeper into how a company has performed in the past. You can access this interactive graph of past earnings, revenue and cash flow for free.
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, but not derivative transactions.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.