Insiders At Avenue Supermarts Sold ₹3.4b In Stock, Alluding To Potential Weakness

Many Avenue Supermarts Limited (NSE:DMART) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. When evaluating insider transactions, knowing whether insiders are buying versus if they selling is usually more beneficial, as the latter can be open to many interpretations. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

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 Avenue Supermarts

Avenue Supermarts Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Group CFO & Whole-Time Director, Ramakant Baheti, sold ₹134m worth of shares at a price of ₹3,596 per share. That means that an insider was selling shares at slightly below the current price (₹4,801). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was only 1.5% of Ramakant Baheti's holding.

All up, insiders sold more shares in Avenue Supermarts than they bought, over the last year. 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!

I will like Avenue Supermarts better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

Insiders At Avenue Supermarts Have Sold Stock Recently

Over the last three months, we've seen notably more insider selling, than insider buying, at Avenue Supermarts. In total, insiders sold ₹259m worth of shares in that time. On the other hand we note insider Kirit Nagda bought ₹403k worth of shares , as previously mentioned . Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.

Insider Ownership Of Avenue Supermarts

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Avenue Supermarts insiders own about ₹2.0t worth of shares (which is 64% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Avenue Supermarts Insiders?

The insider sales have outweighed the insider buying, at Avenue Supermarts, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. But since Avenue Supermarts is profitable and growing, we're not too worried by this. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Avenue Supermarts. For example - Avenue Supermarts has 1 warning sign we think you should be aware of.

Of course Avenue Supermarts may not be the best stock to buy. So you may wish to see this free collection of high quality 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.

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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.