It is not uncommon to see companies perform well in the years after insiders buy shares. 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 shareholders might well want to know whether insiders have been buying or selling shares in ITC Limited (NSE:ITC).

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, most countries require that the company discloses such transactions to the market.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'

See our latest analysis for ITC

The Last 12 Months Of Insider Transactions At ITC

The insider, Yogesh Deveshwar, made the biggest insider sale in the last 12 months. That single transaction was for ₹91m worth of shares at a price of ₹304 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (₹241). So it may not shed much light on insider confidence at current levels.

Over the last year we saw more insider selling of ITC shares, than buying. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

I will like ITC better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

ITC Insiders Are Selling The Stock

The last three months saw significant insider selling at ITC. In total, insiders dumped ₹171m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Does ITC Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that ITC insiders own 0.4% of the company, worth about ₹13b. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.