While it’s been a great week for Indian Energy Exchange Limited (NSE:IEX) shareholders after stock gained 24%, they should consider it with a grain of salt. In spite of the relatively cheap prices, insiders made the decision to sell ₹80m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.
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.
The Last 12 Months Of Insider Transactions At Indian Energy Exchange
The Director of Strategy, Rajesh Mediratta, made the biggest insider sale in the last 12 months. That single transaction was for ₹5.4m worth of shares at a price of ₹363 each. That means that an insider was selling shares at slightly below the current price (₹539). 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 4.7% of Rajesh Mediratta's holding.
Insiders in Indian Energy Exchange didn't buy any shares in 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!
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).
Indian Energy Exchange Insiders Are Selling The Stock
The last three months saw significant insider selling at Indian Energy Exchange. In total, insiders sold ₹32m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Insider Ownership of Indian Energy Exchange
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. Based on our data, Indian Energy Exchange insiders have about 0.2% of the stock, worth approximately ₹335m. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. We prefer to see high levels of insider ownership.
So What Do The Indian Energy Exchange Insider Transactions Indicate?
Insiders sold Indian Energy Exchange shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. But since Indian Energy Exchange 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. 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 Indian Energy Exchange that deserve your attention before buying any shares.
But note: Indian Energy Exchange 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. 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.
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