Should You Be Worried About Insider Transactions At Bhagyanagar India Limited (NSE:BHAGYNAGAR)?

Kyle Sanford

It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So shareholders might well want to know whether insiders have been buying or selling shares in Bhagyanagar India Limited (NSE:BHAGYNAGAR).

What Is Insider Selling?

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, rules govern insider transactions, and certain disclosures are required.

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. 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’.

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The Last 12 Months Of Insider Transactions At Bhagyanagar India

While no particular insider transaction stood out, we can still look at the overall trading.

In the last twelve months insiders purchased 28.81k shares for ₹1.2m. But they sold 28.41k for ₹1.5m. In total, Bhagyanagar India insiders sold more than they bought over the last year. The sellers received a price of around ₹54.38, on average. We are not joyful about insider selling. However, we do note that the average sale price was significantly higher than the current share price (which is ₹34.00). You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

NSEI:BHAGYNAGAR Insider Trading January 12th 19

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Does Bhagyanagar India 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. I reckon it’s a good sign if insiders own a significant number of shares in the company. Bhagyanagar India insiders own 61% of the company, currently worth about ₹659m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At Bhagyanagar India Tell Us?

It doesn’t really mean much that no insider has traded Bhagyanagar India shares in the last quarter. It’s great to see high levels of insider ownership, but looking back at the last year, we don’t gain confidence from the Bhagyanagar India insiders selling. Along with insider transactions, I recommend checking if Bhagyanagar India is growing revenue. This free chart of historic revenue and earnings should make that easy.

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 editorial-team@simplywallst.com.