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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 Setco Automotive Limited (NSE:SETCO).
What Is Insider Buying?
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 equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
Check out our latest analysis for Setco Automotive
The Last 12 Months Of Insider Transactions At Setco Automotive
The Chairman & MD, Harish Sheth, made the biggest insider sale in the last 12 months. That single transaction was for ₹21m worth of shares at a price of ₹34.43 each. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of ₹27.65. So it is hard to draw any strong conclusion from it.
We note that in the last year insiders divested 1.4m shares for a total of ₹40m. In the last year Setco Automotive insiders didn't buy any company stock. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
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Setco Automotive Insiders Are Selling The Stock
Over the last three months, we've seen significant insider selling at Setco Automotive. In total, Harish Sheth sold ₹21m 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.
Insider Ownership
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 14% of Setco Automotive shares, worth about ₹504m, according to our data. But they may have an indirect interest through a corporate structure that we haven't picked up on. Whilst better than nothing, we're not overly impressed by these holdings.