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It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares in L&T Finance Holdings Limited (NSE:L&TFH).
What Is Insider Buying?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia 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'.
Check out our latest analysis for L&T Finance Holdings
L&T Finance Holdings Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Chief Human Resource Officer & Chief Executive of Rural Finance, Sunil Prabhune, for ₹43m worth of shares, at about ₹181 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of ₹127. 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 ₹56m for 363k shares. But they sold 2.2m for ₹353m. Over the last year we saw more insider selling of L&T Finance Holdings shares, than buying. The chart below shows insider transactions (by 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 are like me, then you will not want to miss this freelist of growing companies that insiders are buying.
Does L&T Finance Holdings Boast High Insider Ownership?
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. Our data indicates that L&T Finance Holdings insiders own about ₹564m worth of shares (which is 0.2% of the company). Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!
So What Do The L&T Finance Holdings Insider Transactions Indicate?
There haven't been any insider transactions in the last three months -- that doesn't mean much. While we feel good about high insider ownership of L&T Finance Holdings, we can't say the same about the selling of shares. Of course, the future is what matters most. So if you are interested in L&T Finance Holdings, you should check out this freereport on analyst forecasts for the company.
Of course L&T Finance Holdings may not be the best stock to buy. So you may wish to see this freecollection of high quality companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.