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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 V-Mart Retail Limited (NSE:VMART).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. 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.’
See our latest analysis for V-Mart Retail
The Last 12 Months Of Insider Transactions At V-Mart Retail
Over the last year, we can see that the biggest insider sale was by Chairman & MD Lalit Agarwal for ₹7.4b worth of shares, at about ₹1,689 per share. So it’s clear an insider wanted to take some cash off the table, even below the current price of ₹2,601. Even though it doesn’t necessarily mean anything, that’s certainly not a positive sign, in our book. When an insider sells below the current price, it does tend to make us wonder about the current valuation. Please note, however, that this single sale was 100% of Lalit Agarwal’s stake.
In the last twelve months insiders netted ₹13b for 7.57m shares sold. All up, insiders sold more shares in V-Mart Retail than they bought, over the last year. The sellers received a price of around ₹1,697, on average. We don’t gain much confidence from insider selling near the recent share price. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. The chart below shows insider transactions over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Does V-Mart Retail Boast High Insider Ownership?
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. V-Mart Retail insiders own 20% of the company, currently worth about ₹9.4b based on the recent share price. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.