Anyone interested in Edelweiss Financial Services Limited (NSE:EDELWEISS) should probably be aware that a company insider, Pooja Mittal, recently divested ₹21m worth of shares in the company, at an average price of ₹66.88 each. In particular, we note that the sale equated to a 100% reduction in their position size, which doesn't exactly instill confidence.
Edelweiss Financial Services Insider Transactions Over The Last Year
In fact, the recent sale by insider Pooja Mittal was not their only sale of Edelweiss Financial Services shares this year. Earlier in the year, they fetched ₹82.06 per share in a -₹103m sale. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is ₹62.90. So it may not tell us anything about how insiders feel about the current share price.
Happily, we note that in the last year insiders paid ₹29m for 600.00k shares. But they sold 11.46m shares for ₹551m. In total, Edelweiss Financial Services insiders sold more than they bought over the last year. The average sell price was around ₹48.06. It's not too encouraging to see that insiders have sold at below the current price. But we wouldn't put too much weight on the insider selling. 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!
I will like Edelweiss Financial Services better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Many investors like to check how much of a company is owned by insiders. 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 Edelweiss Financial Services insiders own 38% of the company, worth about ₹21b. 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. In terms of investment risks, we've identified 3 warning signs with Edelweiss Financial Services and understanding them should be part of your investment process.
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, but not derivative transactions.
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