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 before you buy or sell Kitex Garments Limited (NSE:KITEX), you may well want to know whether insiders have been buying or selling.

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

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 Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’

Check out our latest analysis for Kitex Garments

Kitex Garments Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider purchase was by Chairman & MD Sabu Jacob for ₹5.7m worth of shares, at about ₹103 per share. That implies that an insider found the current (approximate) price enticing. Of course they may have changed their mind. But this suggests they are optimistic. We generally consider it a positive if insiders have been buying on market, even if the share price has increased a bit since then.

In the last twelve months insiders paid ₹12m for 366.24k shares purchased. In the last twelve months there was more buying than selling by Kitex Garments insiders. Their average price was about ₹32.46. It is certainly positive to see that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today’s share price. You can see a visual depiction of insider transactions over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

Kitex Garments is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Kitex Garments Insiders Bought Stock Recently

Over the last three months, we’ve seen significant insider buying at Kitex Garments. Specifically, Sabu Jacob bought ₹5.7m worth of shares in that time, and we didn’t record any sales whatsoever. That shows some optimism about the company’s future.

Does Kitex Garments Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. Kitex Garments insiders own about ₹3.6b worth of shares (which is 49% 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.