It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in NCL Industries Limited (NSE:NCLIND).
Do Insider Transactions Matter?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
NCL Industries Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by K. Pooja for ₹14m worth of shares, at about ₹130 per share. That means that an insider was happy to buy shares at around the current price of ₹140. 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. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. Happily, the NCL Industries insiders decided to buy shares at close to current prices.
In the last twelve months insiders purchased 351k shares for ₹48m. But insiders sold 5000 shares worth ₹753k. Overall, NCL Industries insiders were net buyers last year. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Have NCL Industries Insiders Traded Recently?
In the last quarter there were insider sales totalling ₹753k. That's only a tiny bit more than the purchases, worth ₹702k. Looking at the net result, we don't think this recent trading sheds much light on how insiders, as a group, are feeling about the company's prospects.
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 40% of NCL Industries shares, worth about ₹2.5b. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About NCL Industries Insiders?
Unfortunately, there has been more insider selling of NCL Industries stock, than buying, in the last three months. But we take heart from prior transactions. We are also comforted by the high levels of insider ownership. So we're not too bothered by recent selling. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course NCL Industries may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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