Don't Ignore The Insider Selling In Vintage Coffee and Beverages

We'd be surprised if Vintage Coffee and Beverages Limited (NSE:VINCOFE) shareholders haven't noticed that the Non-Executive Director, Vishal Jethalia, recently sold ₹34m worth of stock at ₹117 per share. However, the silver lining is that the sale only reduced their total holding by 7.3%, so we're hesitant to read anything much into it, on its own.

Check out our latest analysis for Vintage Coffee and Beverages

The Last 12 Months Of Insider Transactions At Vintage Coffee and Beverages

In fact, the recent sale by Vishal Jethalia was the biggest sale of Vintage Coffee and Beverages shares made by an insider individual in the last twelve months, according to our records. That means that even when the share price was below the current price of ₹123, an insider wanted to cash in some shares. 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. It is worth noting that this sale was only 7.3% of Vishal Jethalia's holding.

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!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Does Vintage Coffee and Beverages Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Vintage Coffee and Beverages insiders own about ₹5.8b worth of shares. That equates to 39% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Vintage Coffee and Beverages Tell Us?

An insider hasn't bought Vintage Coffee and Beverages stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. On the plus side, Vintage Coffee and Beverages makes money, and is growing profits. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 2 warning signs with Vintage Coffee and Beverages and understanding these should be part of your investment process.

But note: Vintage Coffee and Beverages 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.

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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.