Despite Hitting ₹19.50, Globesecure Technologies Insiders Still Sold Too Soon

Even though Globesecure Technologies Limited (NSE:GSTL) has fallen by 14% over the past week , insiders who sold ₹40m worth of stock over the past year have had less luck. The average selling price of ₹34.25 is still lower than the current share price, or in other words, insiders would have been better off holding on to their shares.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Globesecure Technologies

Globesecure Technologies Insider Transactions Over The Last Year

Notably, that recent sale by MD & Chairman Ragavan Rajkumar was not the only time they sold Globesecure Technologies shares this year. They previously made an even bigger sale of -₹21m worth of shares at a price of ₹39.39 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The good news is that this large sale was at well above current price of ₹19.50. So it may not tell us anything about how insiders feel about the current share price.

Ragavan Rajkumar sold a total of 1.16m shares over the year at an average price of ₹34.25. 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!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Globesecure Technologies Insiders Are Selling The Stock

We've seen more insider selling than insider buying at Globesecure Technologies recently. In that time, MD & Chairman Ragavan Rajkumar dumped ₹19m worth of shares. On the flip side, MD & Chairman Ragavan Rajkumar spent ₹256k on purchasing shares (as mentioned above) . Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the company has been fully valued in recent months.

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Globesecure Technologies insiders own 55% of the company, currently worth about ₹97m 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 Globesecure Technologies Insiders?

The stark truth for Globesecure Technologies is that there has been more insider selling than insider buying in the last three months. Zooming out, the longer term picture doesn't give us much comfort. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For instance, we've identified 4 warning signs for Globesecure Technologies (2 shouldn't be ignored) you should be aware of.

But note: Globesecure Technologies may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.