Insiders At Bajaj Finserv Sold ₹2.5b In Stock, Alluding To Potential Weakness

In the last year, many Bajaj Finserv Ltd. (NSE:BAJAJFINSV) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, when multiple insiders sell stock over a specific duration, shareholders should take notice as that could possibly be a red flag.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Bajaj Finserv

The Last 12 Months Of Insider Transactions At Bajaj Finserv

The insider, Nirajkumar Bajaj, made the biggest insider sale in the last 12 months. That single transaction was for ₹996m worth of shares at a price of ₹1,568 each. So it's clear an insider wanted to take some cash off the table, even below the current price of ₹2,011. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 2.9% of Nirajkumar Bajaj's holding.

Bajaj Finserv insiders didn't buy any shares over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

I will like Bajaj Finserv 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.

Insiders At Bajaj Finserv Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Bajaj Finserv. Specifically, insiders ditched ₹255m 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.

Insider Ownership Of Bajaj Finserv

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 Bajaj Finserv insiders own 3.5% of the company, worth about ₹113b. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Bajaj Finserv Tell Us?

Insiders sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. But it is good to see that Bajaj Finserv is growing earnings. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For instance, we've identified 2 warning signs for Bajaj Finserv (1 is significant) you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.