For Cigniti Technologies Insiders, Selling ₹4.2b Of Shares Was A Smart Move

Despite a 16% gain in Cigniti Technologies Limited's (NSE:CIGNITITEC) stock price this week, shareholders shouldn't let up. In spite of the relatively cheap prices, insiders made the decision to sell ₹4.2b worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.

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.

View our latest analysis for Cigniti Technologies

Cigniti Technologies Insider Transactions Over The Last Year

The insider, Venkata Chakkilam, made the biggest insider sale in the last 12 months. That single transaction was for ₹1.9b worth of shares at a price of ₹1,398 each. That means that even when the share price was below the current price of ₹1,538, 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. We note that the biggest single sale was only 49% of Venkata Chakkilam's holding.

In the last year Cigniti Technologies insiders didn't buy any company stock. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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Insiders At Cigniti Technologies Have Sold Stock Recently

The last quarter saw substantial insider selling of Cigniti Technologies shares. In total, insider Urmila Markili sold ₹15m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Cigniti Technologies insiders own 32% of the company, currently worth about ₹13b 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 Cigniti Technologies Insiders?

An insider sold Cigniti Technologies shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Cigniti Technologies. While conducting our analysis, we found that Cigniti Technologies has 2 warning signs and it would be unwise to ignore them.

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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.