Have Edelweiss Financial Services Limited (NSE:EDELWEISS) Insiders Been Selling Their Stock?

Simply Wall St
March 10, 2021

Some Edelweiss Financial Services Limited (NSE:EDELWEISS) shareholders may be a little concerned to see that insider Deepak Mittal recently sold a substantial ₹106m worth of stock at a price of ₹69.54 per share. That's a big disposal, and it decreased their holding size by 15%, which is notable but not too bad.

View our latest analysis for Edelweiss Financial Services

Edelweiss Financial Services Insider Transactions Over The Last Year

In fact, the recent sale by Deepak Mittal was the biggest sale of Edelweiss Financial Services shares made by an insider individual in the last twelve months, according to our records. So it's clear an insider wanted to take some cash off the table, even below the current price of ₹83.70. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 15% of Deepak Mittal's holding.

In the last twelve months insiders purchased 600.00k shares for ₹29m. But insiders sold 13.28m shares worth ₹676m. All up, insiders sold more shares in Edelweiss Financial Services than they bought, over the last year. The average sell price was around ₹50.95. It's not too encouraging to see that insiders have sold at below the current price. Since insiders sell for many reasons, we wouldn't put too much weight on it. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

NSEI:EDELWEISS Insider Trading Volume March 11th 2021

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Edelweiss Financial Services insiders own about ₹26b worth of shares (which is 38% of the company). 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 Edelweiss Financial Services Insider Transactions Indicate?

Insiders haven't bought Edelweiss Financial Services stock in the last three months, but there was some selling. And our longer term analysis of insider transactions didn't bring confidence, either. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we found 3 warning signs for Edelweiss Financial Services that deserve your attention before buying any shares.

But note: Edelweiss Financial Services 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, 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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