Don't Ignore The Insider Selling In Avantel

Some Avantel Limited (NSE:AVANTEL) shareholders may be a little concerned to see that the Chairman, Abburi Vidyasagar, recently sold a substantial ₹230m worth of stock at a price of ₹152 per share. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 3.7%.

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The Last 12 Months Of Insider Transactions At Avantel

In fact, the recent sale by Abburi Vidyasagar was the biggest sale of Avantel shares made by an insider individual in the last twelve months, according to our records. So what is clear is that an insider saw fit to sell at around the current price of ₹145. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).

Abburi Vidyasagar ditched 1.60m shares over the year. The average price per share was ₹150. 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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Insider Ownership Of Avantel

For a common shareholder, it is worth checking how many shares are held by company 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. Avantel insiders own about ₹16b worth of shares (which is 46% of the company). 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 Do The Avantel Insider Transactions Indicate?

An insider hasn't bought Avantel stock in the last three months, but there was some selling. And even if we look at the last year, we didn't see any purchases. But since Avantel is profitable and growing, we're not too worried by this. 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. In terms of investment risks, we've identified 1 warning sign with Avantel and understanding it should be part of your investment process.

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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.