It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell TeamLease Services Limited (NSE:TEAMLEASE), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
We don’t think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. 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’.
The Last 12 Months Of Insider Transactions At TeamLease Services
CTO & Senior VP Sharanabasappa Shirol made the biggest insider sale in the last 12 months. That single transaction was for ₹16m worth of shares at a price of ₹2,696 each. That means that an insider was selling shares at slightly below the current price (₹3,026). While their view may have changed since they sold, this isn’t a particularly bullish sign. When an insider sells below the current price, it does tend to make us wonder about the current valuation. It is worth noting that this sale was 76.8% of Sharanabasappa Shirol’s holding.
In the last twelve months insiders purchased 5.44k shares for ₹14m. But they sold 21.52k for ₹59m. In total, TeamLease Services insiders sold more than they bought over the last year. The average sell price was around ₹2,720. It’s not particularly great to see insiders were selling shares at below recent prices. Of course, the sales could be motivated for a multitude of reasons, so we shouldn’t jump to conclusions. 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
TeamLease Services Insiders Are Selling The Stock
The last three months saw some TeamLease Services insider selling. In total, insiders sold ₹2.8m worth of shares in that time. But the good news is that Hari Krishna bought ₹847k worth. While it’s not great to see insider selling, the net amount sold isn’t enough for us to want to read anything into it.
Does TeamLease Services Boast High 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. A high insider ownership often makes company leadership more mindful of shareholder interests. From our data, it seems that TeamLease Services insiders own 1.1% of the company, worth about ₹591m. But they may have an indirect interest through a corporate structure that we haven’t picked up on. Overall, this level of ownership isn’t that impressive, but it’s certainly better than nothing!
So What Do The TeamLease Services Insider Transactions Indicate?
Unfortunately, there has been more insider selling of TeamLease Services stock, than buying, in the last three months. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. The company boasts high insider ownership, but we’re a little hesitant, given the history of share sales. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course TeamLease Services may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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If you spot an error that warrants correction, please contact the editor at email@example.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.