Read This Before Selling Chembond Chemicals Limited (NSE:CHEMBOND) Shares

We often see insiders buying up shares in companies that perform well over the long term. 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 we'll take a look at whether insiders have been buying or selling shares in Chembond Chemicals Limited (NSE:CHEMBOND).

Do Insider Transactions Matter?

It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.

Check out our latest analysis for Chembond Chemicals

Chembond Chemicals Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Chairman & MD Sameer Shah bought ₹3.8m worth of shares at a price of ₹137 per share. Even though the purchase was made at a significantly lower price than the recent price (₹185), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

While Chembond Chemicals insiders bought shares during the last year, they didn't sell. 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!

Chembond Chemicals is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Are Chembond Chemicals Insiders Buying Or Selling?

There was only a small bit of insider buying, worth ₹103k, in the last three months. 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 Chembond Chemicals

For a common shareholder, it is worth checking how many shares are held by company insiders. 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 Chembond Chemicals insiders own 56% of the company, worth about ₹1.4b. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At Chembond Chemicals Tell Us?

The recent insider purchases are heartening. And the longer term insider transactions also give us confidence. Once you factor in the high insider ownership, it certainly seems like insiders are positive about Chembond Chemicals. That's what I like to see! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Chembond Chemicals. Our analysis shows 4 warning signs for Chembond Chemicals (1 is a bit unpleasant!) and we strongly recommend you look at these before investing.

But note: Chembond Chemicals 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. 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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