Happiest Minds Technologies Limited (NSE:HAPPSTMNDS) insiders sold ₹46m worth of stock, a possible red flag that's yet to materialize

By
Simply Wall St
Published
September 05, 2021
NSEI:HAPPSTMNDS
Source: Shutterstock

While it’s been a great week for Happiest Minds Technologies Limited (NSE:HAPPSTMNDS) shareholders after stock gained 6.3%, they should consider it with a grain of salt. Although prices were relatively low, insiders chose to sell ₹46m worth of stock in the past 12 months. This could be a sign of impending weakness.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for Happiest Minds Technologies

Happiest Minds Technologies Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the insider, Chittoor George, sold ₹16m worth of shares at a price of ₹321 per share. That means that an insider was selling shares at slightly below the current price (₹1,503). 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was 50% of Chittoor George's stake.

In the last year Happiest Minds Technologies insiders didn't buy any company stock. 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!

insider-trading-volume
NSEI:HAPPSTMNDS Insider Trading Volume September 6th 2021

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

Are Happiest Minds Technologies Insiders Buying Or Selling?

In the last three months company insiders divested ₹12k worth of stock. That is not a lot. The net selling is so small that it's hard to draw any conclusions from these recent transactions.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Happiest Minds Technologies insiders own 50% of the company, currently worth about ₹106b based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The Happiest Minds Technologies Insider Transactions Indicate?

While there has not been any insider buying in the last three months, there has been selling. But given the selling was modest, we're not worried. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Happiest Minds Technologies insiders selling. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. At Simply Wall St, we found 1 warning sign for Happiest Minds Technologies that deserve your attention before buying any shares.

Of course Happiest Minds Technologies 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, but not derivative transactions.

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