Read This Before Selling Som Distilleries & Breweries Limited (NSE:SDBL) Shares

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 shareholders might well want to know whether insiders have been buying or selling shares in Som Distilleries & Breweries Limited (NSE:SDBL).

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, such insiders must disclose their trading activities, and not trade on inside information.

We don't think shareholders should simply follow insider transactions. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

Check out our latest analysis for Som Distilleries & Breweries

The Last 12 Months Of Insider Transactions At Som Distilleries & Breweries

While there weren't any large insider transactions in the last twelve months, it's still worth looking at the trading.

Happily, we note that in the last year insiders paid ₹170k for 6.20k shares. But insiders sold 200.00 shares worth ₹6.6k. In total, Som Distilleries & Breweries insiders bought more than they sold over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

Som Distilleries & Breweries is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Are Som Distilleries & Breweries Insiders Buying Or Selling?

In the last quarter we saw Director of Finance & Strategy and Whole-Time Director Nakul Sethi spend ₹28k on shares. But that was only a smidgen more than the ₹6.6k worth of sales. Looking at the net result, we don't think these recent trades shed much light on how insiders, as a group, are feeling about the company's prospects.

Insider Ownership of Som Distilleries & Breweries

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. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Som Distilleries & Breweries insiders own 53% of the company, worth about ₹1.2b. 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 Som Distilleries & Breweries Insiders?

Insider purchases may have been minimal, in the last three months, but there was no selling at all. Overall the buying isn't worth writing home about. On a brighter note, the transactions over the last year are encouraging. It would be great to see more insider buying, but overall it seems like Som Distilleries & Breweries insiders are reasonably well aligned (owning significant chunk of the company's shares) and optimistic for the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example, Som Distilleries & Breweries has 3 warning signs (and 2 which are a bit concerning) we think you should know about.

Of course Som Distilleries & Breweries may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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. 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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