We often see insiders buying up shares in companies that perform well over the long term. 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 before you buy or sell TeamLease Services Limited (NSE:TEAMLEASE), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
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, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
The Last 12 Months Of Insider Transactions At TeamLease Services
The CTO & Senior VP, Sharanabasappa Shirol, made the biggest insider sale in the last 12 months. That single transaction was for ₹16m worth of shares at a price of ₹2,696 each. That means that an insider was selling shares at slightly below the current price (₹2,924). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was 76.8% of Sharanabasappa Shirol's holding.
Over the last year, we can see that insiders have bought 4670 shares worth ₹12m. But they sold 18825 for ₹52m. In total, TeamLease Services insiders sold more than they bought over the last year. 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!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
TeamLease Services Insiders Are Selling The Stock
We have seen a bit of insider selling at TeamLease Services, over the last three months. The selling netted ₹2.8m for insiders. But at least we saw ₹847k worth of buying. While it's not great to see insider selling, the net amount sold isn't enough for us to want to read anything into it.
Does TeamLease Services Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From our data, it seems that TeamLease Services insiders own 1.1% of the company, worth about ₹562m. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!
So What Do The TeamLease Services Insider Transactions Indicate?
Unfortunately, there has been more insider selling of TeamLease Services stock, than buying, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for TeamLease Services.
But note: TeamLease Services 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.
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.