Possible Bearish Signals With HDFC Asset Management Insiders Disposing Stock

Over the past year, many HDFC Asset Management Company Limited (NSE:HDFCAMC) insiders sold a significant stake in the company which may have piqued investors' interest. 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, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for HDFC Asset Management

HDFC Asset Management Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the insider, SRIKANTH G., for ₹99m worth of shares, at about ₹2,491 per share. That means that an insider was selling shares at slightly below the current price (₹4,208). 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 27% of SRIKANTH G.'s holding.

In the last year HDFC Asset Management insiders didn't buy any company stock. 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!

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

Insiders At HDFC Asset Management Have Sold Stock Recently

The last three months saw significant insider selling at HDFC Asset Management. In total, insiders dumped ₹19m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership Of HDFC Asset Management

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. HDFC Asset Management insiders own about ₹9.4b worth of shares (which is 1.0% 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 HDFC Asset Management Insider Transactions Indicate?

Insiders haven't bought HDFC Asset Management stock in the last three months, but there was some selling. And even if we look at the last year, we didn't see any purchases. But it is good to see that HDFC Asset Management is growing earnings. 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. Every company has risks, and we've spotted 1 warning sign for HDFC Asset Management you should know about.

But note: HDFC Asset Management 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.