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It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell Navin Fluorine International Limited (NSE:NAVINFLUOR), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
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 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 Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
The Last 12 Months Of Insider Transactions At Navin Fluorine International
In the last twelve months, the biggest single sale by an insider was when the VP & Business Head-International Trade, T. Nandakumar, sold ₹14m worth of shares at a price of ₹728 per share. So it’s clear an insider wanted to take some cash off the table, even below the current price of ₹745. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don’t know for sure what they think of the stock price. This single sale was 98.3% of T. Nandakumar’s stake.
In the last twelve months insiders purchased 3701 shares for ₹2.3m. But they sold 49318 for ₹35m. All up, insiders sold more shares in Navin Fluorine International than they bought, over the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
I will like Navin Fluorine International better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Navin Fluorine International Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Navin Fluorine International shares. In total, T. Nandakumar sold ₹14m worth of shares in that time, and we didn’t record any purchases whatsoever. In light of this it’s hard to argue that all the insiders think that the shares are a bargain.
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Insiders own 5.4% of Navin Fluorine International shares, worth about ₹2.0b. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About Navin Fluorine International Insiders?
An insider hasn’t bought Navin Fluorine International stock in the last three months, but there was some selling. Zooming out, the longer term picture doesn’t give us much comfort. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn’t make us feel confident about the company. Of course, the future is what matters most. So if you are interested in Navin Fluorine International, you should check out this free report on analyst forecasts for the company.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
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If you spot an error that warrants correction, please contact the editor at email@example.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.