While Polyplex Corporation Limited (NSE:POLYPLEX) shareholders have enjoyed a good week with stock up 12%, they need remain vigilant. The fact that insiders chose to dispose of ₹259m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.
Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.
The Last 12 Months Of Insider Transactions At Polyplex
The Non-Executive Non-Independent Chairman, Sanjiv Saraf, made the biggest insider sale in the last 12 months. That single transaction was for ₹259m worth of shares at a price of ₹796 each. That means that even when the share price was below the current price of ₹1,747, an insider wanted to cash in some shares. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was 100% of Sanjiv Saraf's holding. The only individual insider seller over the last year was Sanjiv Saraf.
The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like Polyplex better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does Polyplex Boast High Insider Ownership?
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. It appears that Polyplex insiders own 11% of the company, worth about ₹6.2b. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At Polyplex Tell Us?
The fact that there have been no Polyplex insider transactions recently certainly doesn't bother us. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of Polyplex insider transactions don't fill us with confidence. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. You'd be interested to know, that we found 2 warning signs for Polyplex and we suggest you have a look.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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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