Keep An Eye On Axita Cotton As Insider Stock Selling Hits ₹53m

While Axita Cotton Limited (NSE:AXITA) shareholders have had a good week with the stock up 15%, they shouldn't let their guards down. Even though stock prices were relatively low, insiders elected to sell ₹53m worth of stock in the last year, which could indicate some expected downturn.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Axita Cotton

Axita Cotton Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the MD & Non-Executive Director, Kushalkumar Patel, sold ₹45m worth of shares at a price of ₹55.15 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of ₹30.00. So it may not tell us anything about how insiders feel about the current share price.

In the last year Axita Cotton insiders didn't buy any company stock. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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 Axita Cotton insiders own 76% of the company, worth about ₹4.4b. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Does This Data Suggest About Axita Cotton Insiders?

There haven't been any insider transactions in the last three months -- that doesn't mean much. While we feel good about high insider ownership of Axita Cotton, we can't say the same about the selling of shares. 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. Case in point: We've spotted 3 warning signs for Axita Cotton you should be aware of, and 1 of these is a bit unpleasant.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.