Should You Review Recent Insider Transactions At 5paisa Capital Limited (NSE:5PAISA)?

By
Simply Wall St
Published
September 05, 2020

We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in 5paisa Capital Limited (NSE:5PAISA).

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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'.

See our latest analysis for 5paisa Capital

The Last 12 Months Of Insider Transactions At 5paisa Capital

There wasn't any very large single transaction over the last year, but we can still observe some trading.

Happily, we note that in the last year insiders paid ₹456k for 3.00k shares. But they sold 72.29k shares for ₹15m. Over the last year we saw more insider selling of 5paisa Capital shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

NSEI:5PAISA Insider Trading Volume September 6th 2020

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insiders at 5paisa Capital Have Sold Stock Recently

The last quarter saw substantial insider selling of 5paisa Capital shares. In total, insider Nipun Goel dumped ₹7.6m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Does 5paisa Capital 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. 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 5paisa Capital insiders own 40% of the company, worth about ₹4.1b. 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 Do The 5paisa Capital Insider Transactions Indicate?

An insider hasn't bought 5paisa Capital stock in the last three months, but there was some selling. 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. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing 5paisa Capital. For instance, we've identified 3 warning signs for 5paisa Capital (1 is significant) you should be aware of.

Of course 5paisa Capital 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, but not derivative transactions.

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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. 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.
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