We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Edelweiss Financial Services Limited (NSE:EDELWEISS), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 Colombia 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’.
Edelweiss Financial Services Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when Nitin Jain sold ₹197m worth of shares at a price of ₹287 per share. While the sale doesn’t make us feel confident, we do note it was conducted at a price well above the current share price, which is ₹177. So it may not shed much light on insider confidence at current levels.
Over the last year we saw more insider selling of Edelweiss Financial Services shares, than buying. The average sell price was around ₹289. We are not joyful about insider selling. However, we do note that the average sale price was significantly higher than the current share price (which is ₹177). You can see a visual depiction of insider transactions 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!
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.
Edelweiss Financial Services Insiders Are Selling The Stock
We’ve seen more insider selling than insider buying at Edelweiss Financial Services recently. In that time, Raviprakash Bubna dumped ₹5.8m worth of shares. On the flip side, Rajeev Varma spent ₹1.5m on purchasing shares (as mentioned above). Since the selling really does outweigh the buying, we’d say that these transactions may suggest that some insiders feel the company has been fully valued in recent months.
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that Edelweiss Financial Services insiders own 38% of the company, worth about ₹62b. 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 Does This Data Suggest About Edelweiss Financial Services Insiders?
The insider sales have outweighed the insider buying, at Edelweiss Financial Services, in the last three months. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. But since Edelweiss Financial Services is profitable and growing, we’re not too worried by this. The company boasts high insider ownership, but we’re a little hesitant, given the history of share sales. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Edelweiss Financial Services.
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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.