Need To Know: Carborundum Universal Limited (NSE:CARBORUNIV) Insiders Have Been Buying Shares
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It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in Carborundum Universal Limited (NSE:CARBORUNIV).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, most countries require that the company discloses such transactions to the market.
We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
Check out our latest analysis for Carborundum Universal
Carborundum Universal Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Executive Vice President of Human Resources M. Muthiah for ₹174m worth of shares, at about ₹355 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being ₹353). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
Over the last year, we can see that insiders have bought 1.3m shares worth ₹460m. On the other hand they divested 1.3m shares, for ₹458m. Overall, Carborundum Universal insiders were net buyers last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Carborundum Universal is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Carborundum Universal Insiders Are Selling The Stock
The last three months saw significant insider selling at Carborundum Universal. In total, M. V. Subbiah sold ₹10m 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.
Does Carborundum Universal Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 8.3% of Carborundum Universal shares, worth about ₹5.5b. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
So What Does This Data Suggest About Carborundum Universal Insiders?
An insider hasn't bought Carborundum Universal stock in the last three months, but there was some selling. But we take heart from prior transactions. On top of that, insiders own a significant portion of the company. So the recent selling doesn't worry us. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Carborundum Universal.
But note: Carborundum Universal 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.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
