While it’s been a great week for KPIT Technologies Limited (NSE:KPITTECH) shareholders after stock gained 3.4%, they should consider it with a grain of salt. The fact that insiders chose to dispose of ₹78m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated 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 KPIT Technologies
The President & Whole-Time Director, Sachin Tikekar, made the biggest insider sale in the last 12 months. That single transaction was for ₹51m worth of shares at a price of ₹513 each. So it's clear an insider wanted to take some cash off the table, even below the current price of ₹585. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 12% of Sachin Tikekar's holding.
Insiders in KPIT Technologies didn't buy any shares in the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
KPIT Technologies Insiders Are Selling The Stock
Over the last three months, we've seen a bit of insider selling at KPIT Technologies. insider Samir Kulkarni sold just ₹3.1m worth of shares in that time. Neither the lack of buying nor the presence of selling is heartening. But the volume sold is so low that it really doesn't bother us.
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. It's great to see that KPIT Technologies insiders own 8.9% of the company, worth about ₹14b. 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 KPIT Technologies Insider Transactions Indicate?
An insider sold KPIT Technologies shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. But since KPIT Technologies is profitable and growing, we're not too worried by this. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing KPIT Technologies. Every company has risks, and we've spotted 2 warning signs for KPIT Technologies you should know about.
Of course KPIT Technologies may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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.