Ami Organics Insiders Benefitted From Selling Stock At ₹1,550

While it’s been a great week for Ami Organics Limited (NSE:AMIORG) shareholders after stock gained 13%, they should consider it with a grain of salt. Although prices were relatively low, insiders chose to sell ₹39m worth of stock in the past 12 months. This could be a sign of impending weakness.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

The Last 12 Months Of Insider Transactions At Ami Organics

Over the last year, we can see that the biggest insider sale was by the insider, M. Koladia, for ₹39m worth of shares, at about ₹1,540 per share. That means that even when the share price was below the current price of ₹2,494, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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. We note that the biggest single sale was only 13% of M. Koladia's holding.

Ami Organics insiders didn't buy any shares over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

Check out our latest analysis for Ami Organics

I will like Ami Organics better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Have Ami Organics Insiders Traded Recently?

Over the last three months, we've seen a bit of insider selling at Ami Organics. Whole Time Director Ram Mohan Lokhande divested only ₹852k worth of shares in that time. It's not great to see insider selling, nor the lack of recent buyers. But the selling simply isn't sufficiently substantial to be of much use as a signal.

Insider Ownership

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. Ami Organics insiders own 44% of the company, currently worth about ₹45b 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 Ami Organics Insiders?

An insider hasn't bought Ami Organics stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. But since Ami Organics is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 1 warning sign for Ami Organics you should be aware of.

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. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.