Insiders Made Right Decision To Sell As Arvind Fashions Dips 11%

By selling ₹61m worth of Arvind Fashions Limited (NSE:ARVINDFASN) stock at an average sell price of ₹401 over the last year, insiders seemed to have made the most of their holdings. The company’s market cap plunged by ₹9.7b after price dropped by 11% last week but insiders were able to limit their loss to an extent.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

Check out our latest analysis for Arvind Fashions

Arvind Fashions Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Non-Executive Director, Suresh Jayaraman, for ₹28m worth of shares, at about ₹402 per share. That means that an insider was selling shares at slightly below the current price (₹561). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 7.2% of Suresh Jayaraman's holding.

Arvind Fashions insiders didn't buy any shares over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

I will like Arvind Fashions 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.

Insider Ownership Of Arvind Fashions

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Arvind Fashions insiders own 9.9% of the company, worth about ₹7.4b. 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 Do The Arvind Fashions Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Arvind Fashions insiders selling. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Arvind Fashions. You'd be interested to know, that we found 1 warning sign for Arvind Fashions and we suggest you have a look.

Of course Arvind Fashions 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 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.