Read This Before Selling JK Paper Limited (NSE:JKPAPER) Shares

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 before you buy or sell JK Paper Limited (NSE:JKPAPER), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 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 JK Paper

JK Paper Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Non Executive Non-Independent Director Vinita Singhania bought ₹10m worth of shares at a price of ₹85.69 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of ₹146. 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.

JK Paper insiders may have bought shares in the last year, but they didn't sell any. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

JK Paper is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insider Ownership of JK Paper

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. It appears that JK Paper insiders own 7.7% of the company, worth about ₹1.9b. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At JK Paper Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. On a brighter note, the transactions over the last year are encouraging. Judging from their transactions, and high insider ownership, JK Paper insiders feel good about the company's future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing JK Paper. When we did our research, we found 4 warning signs for JK Paper (1 shouldn't be ignored!) that we believe deserve your full attention.

Of course JK Paper 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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