Possible Bearish Signals With Bajaj Finance Insiders Disposing Stock

In the last year, many Bajaj Finance Limited (NSE:BAJFINANCE) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, 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 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.

Check out our latest analysis for Bajaj Finance

Bajaj Finance Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the MD & Executive Director, Rajeev Jain, for ₹1.2b worth of shares, at about ₹6,450 per share. That means that an insider was selling shares at slightly below the current price (₹7,607). 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. It is worth noting that this sale was 52% of Rajeev Jain's holding.

Bajaj Finance 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 click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Does Bajaj Finance Boast High Insider Ownership?

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. It's great to see that Bajaj Finance insiders own 0.2% of the company, worth about ₹9.9b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Bajaj Finance Insider Transactions Indicate?

The fact that there have been no Bajaj Finance insider transactions recently certainly doesn't bother us. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Bajaj Finance insiders selling. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Bajaj Finance. Every company has risks, and we've spotted 3 warning signs for Bajaj Finance (of which 2 don't sit too well with us!) you should know about.

But note: Bajaj Finance 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.