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We often see insiders buying up shares in companies that perform well over the long term. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we'll take a look at whether insiders have been buying or selling shares in N.K Industries Limited (NSE:NKIND).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
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.'
The Last 12 Months Of Insider Transactions At N.K Industries
Over the last year, we can see that the biggest insider purchase was by MD & Director Nileshbhai Patel for ₹7.7m worth of shares, at about ₹45.30 per share. That means that even when the share price was higher than ₹35.95 (the recent price), an insider wanted to purchase shares. Their view may have changed since then, but at least it shows they felt optimistic at the time. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Nileshbhai Patel was the only individual insider to buy shares in the last twelve months.
Nileshbhai Patel bought a total of 202k shares over the year at an average price of ₹45.76. 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!
N.K Industries is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership of N.K Industries
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. We usually like to see fairly high levels of insider ownership. N.K Industries insiders own about ₹164m worth of shares (which is 75% of the company). 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 N.K Industries Insider Transactions Indicate?
It doesn't really mean much that no insider has traded N.K Industries shares in the last quarter. However, our analysis of transactions over the last year is heartening. Judging from their transactions, and high insider ownership, N.K Industries insiders feel good about the company's future. Along with insider transactions, I recommend checking if N.K Industries is growing revenue. This free chart of historic revenue and earnings should make that easy.
Of course N.K Industries may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.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.