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 shareholders might well want to know whether insiders have been buying or selling shares in Ramco Systems Limited (NSE:RAMCOSYS).
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, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, ‘insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.’
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The Last 12 Months Of Insider Transactions At Ramco Systems
S. Srinivasan made the biggest insider sale in the last 12 months. That single transaction was for ₹6.9m worth of shares at a price of ₹516 each. Although we don’t gain confidence from insider selling, we note that this large sale was at well above current price of ₹272. So it may not tell us anything about how insiders feel about the current share price.
We note that in the last year insiders divested 44.71k shares for a total of ₹21m. All up, insiders sold more shares in Ramco Systems than they bought, over the last year. They sold for an average price of about ₹469. Insider selling doesn’t make us excited to buy. But we note that the selling, on average, was at well above the recently traded price of ₹272. The chart below shows insider transactions (by 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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Does Ramco Systems Boast High Insider Ownership?
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. Ramco Systems insiders own about ₹1.5b worth of shares. That equates to 19% of the company. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Do The Ramco Systems Insider Transactions Indicate?
There haven’t been any insider transactions in the last three months — that doesn’t mean much. It’s great to see high levels of insider ownership, but looking back at the last year, we don’t gain confidence from the Ramco Systems insiders selling. Of course, the future is what matters most. So if you are interested in Ramco Systems, you should check out this free report on analyst forecasts for the company.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.