Should You Take Comfort From Insider Transactions At JSW Steel Limited (NSE:JSWSTEEL)?

By
Simply Wall St
Published
April 12, 2019
NSEI:JSWSTEEL

We often see insiders buying up shares in companies that perform well over the long term. 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 JSW Steel Limited (NSE:JSWSTEEL), you may well want to know whether insiders have been buying or selling.

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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.'

View our latest analysis for JSW Steel

The Last 12 Months Of Insider Transactions At JSW Steel

In the last twelve months, the biggest single purchase by an insider was when Parth Jindal bought ₹20m worth of shares at a price of ₹400 per share. That means that even when the share price was higher than ₹287 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Happily, we note that in the last year insiders bought 51000 shares for a total of ₹20m. In the last twelve months JSW Steel insiders were buying shares, but not selling. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

NSEI:JSWSTEEL Recent Insider Trading, April 12th 2019
NSEI:JSWSTEEL Recent Insider Trading, April 12th 2019

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

Does JSW Steel Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. JSW Steel insiders own 1.6% of the company, currently worth about ₹11b based on the recent share price. 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 JSW Steel Insiders?

It doesn't really mean much that no insider has traded JSW Steel shares in the last quarter. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like JSW Steel insiders think the business has merit. Of course, the future is what matters most. So if you are interested in JSW Steel, you should check out this freereport on analyst forecasts for the company.

Of course JSW Steel 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.

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