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We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. 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 Future Consumer Limited (NSE:FCONSUMER).

What Is Insider Buying?

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 equally, we would consider it foolish to ignore insider transactions altogether. 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'.

See our latest analysis for Future Consumer

The Last 12 Months Of Insider Transactions At Future Consumer

The Compliance Officer, Manoj Gagvani, made the biggest insider sale in the last 12 months. That single transaction was for ₹4.2m worth of shares at a price of ₹40.76 each. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of ₹41.25. 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. This single sale was just 11.1% of Manoj Gagvani's stake.

In the last twelve months insiders purchased 183k shares for ₹8.5m. On the other hand they divested 832k shares, for ₹36m. All up, insiders sold more shares in Future Consumer than they bought, over the last year. The sellers received a price of around ₹42.76, on average. It's not ideal to see that insiders have sold at around the current price. While some insiders have decided to take some money off the table, we wouldn't put too much weight on this fact. You can see the insider transactions (by individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

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Insiders at Future Consumer Have Sold Stock Recently

There was substantially more insider selling, than buying, of Future Consumer shares over the last three months. In total, insiders sold ₹17m worth of shares in that time. On the flip side, Mukesh Somara spent ₹1.1m on purchasing shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.

Does Future Consumer Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 1.9% of Future Consumer shares, worth about ₹1.5b. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Future Consumer Tell Us?

The stark truth for Future Consumer is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. It is good to see high insider ownership, but the insider selling leaves us cautious. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Future Consumer.

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.

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 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.