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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. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So we’ll take a look at whether insiders have been buying or selling shares in Gallantt Metal Limited (NSE:GALLANTT).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. 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 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.’
View our latest analysis for Gallantt Metal
Gallantt Metal Insider Transactions Over The Last Year
Santosh Agrawala made the biggest insider sale in the last 12 months. That single transaction was for ₹20m worth of shares at a price of ₹39.46 each. That means that an insider was selling shares at below the current price (₹55.50). While sellers have a variety of reasons for selling, this isn’t particularly great to see. As a general rule we consider it to be discouraging when insiders are selling below the current price. It is worth noting that this sale was only 16.1% of Santosh Agrawala’s holding. Santosh Agrawala was the only individual insider to sell over the last year.
Over the last year, we can see that insiders have bought 2.56m shares worth ₹102m. But they sold 500.00k for ₹20m. In the last twelve months there was more buying than selling by Gallantt Metal insiders. The average buy price was around ₹39.89. It is certainly positive to see that insiders have invested their own money in the company. But we must note that the investments were made at well below 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!
I will like Gallantt Metal better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
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. Gallantt Metal insiders own about ₹416m worth of shares (which is 9.3% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.