It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Sanwaria Consumer Limited (NSE:SANWARIA), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
The Last 12 Months Of Insider Transactions At Sanwaria Consumer
In the last twelve months, the biggest single sale by an insider was when Beenu Garg sold ₹170m worth of shares at a price of ₹18.42 per share. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of ₹10.35. So it may not shed much light on insider confidence at current levels.
Happily, we note that in the last year insiders paid ₹638k for 48.00k shares. But they sold 9.28m for ₹171m. Over the last year we saw more insider selling of Sanwaria Consumer shares, than buying. The sellers received a price of around ₹18.40, on average. We are not joyful about insider selling. But we note that the selling, on average, was at well above the recently traded price of ₹10.35. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. 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 Sanwaria Consumer insiders own 41% of the company, worth about ₹3.1b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
What Might The Insider Transactions At Sanwaria Consumer Tell Us?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. It’s great to see high levels of insider ownership, but looking back at the last year, we don’t gain confidence from the Sanwaria Consumer insiders selling. To put this in context, take a look at how a company has performed in the past. You can access this detailed graph of past earnings, revenue and cash flow .
But note: Sanwaria Consumer 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.