Selling Century Enka Shares at a Lower Price Than Current Market Value May Have Been a Costly Mistake for Insiders

Despite the fact that Century Enka Limited's (NSE:CENTENKA) value has dropped 10% in the last week insiders who sold ₹48m worth of stock in the past 12 months have had less success. Given that the average selling price of ₹674 is still lower than the current share price, insiders would probably have been better off keeping their shares.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Century Enka

Century Enka Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the insider, Kumar Birla, sold ₹48m worth of shares at a price of ₹674 per share. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is ₹575. So it is hard to draw any strong conclusion from it. Kumar Birla was the only individual insider to sell shares in the last twelve months.

The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

I will like Century Enka better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Insider Ownership Of Century Enka

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. From our data, it seems that Century Enka insiders own 5.5% of the company, worth about ₹691m. 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 Does This Data Suggest About Century Enka Insiders?

It doesn't really mean much that no insider has traded Century Enka shares in the last quarter. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Century Enka insiders selling. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that Century Enka is showing 2 warning signs in our investment analysis, and 1 of those is a bit concerning...

But note: Century Enka 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.