Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

We often see insiders buying up shares in companies that perform well over the long term. 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 we'll take a look at whether insiders have been buying or selling shares in Kitex Garments Limited (NSE:KITEX).

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.

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. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.'

View our latest analysis for Kitex Garments

The Last 12 Months Of Insider Transactions At Kitex Garments

In the last twelve months, the biggest single purchase by an insider was when Chairman & MD Sabu Jacob bought ₹5.7m worth of shares at a price of ₹103 per share. That means that an insider was happy to buy shares at above the current price of ₹92.90. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares is very important. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. Sabu Jacob was the only individual insider to buy over the year.

Sabu Jacob bought 210k shares over the last 12 months at an average price of ₹27.16. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership of Kitex Garments

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. Kitex Garments insiders own about ₹3.1b worth of shares (which is 50% 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.