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It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Persistent Systems Limited (NSE:PERSISTENT).
What Is Insider Buying?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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 Persistent Systems
Persistent Systems Insider Transactions Over The Last Year
insider Narasinha Upadhye made the biggest insider purchase in the last 12 months. That single transaction was for ₹23m worth of shares at a price of ₹567 each. So it's clear an insider wanted to buy, at around the current price, which is ₹595. Of course they may have changed their mind. But this suggests they are optimistic. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. The good news for Persistent Systems share holders is that insiders were buying at near the current price.
Happily, we note that in the last year insiders paid ₹47m for 83900 shares. But they sold 13812 for ₹8.4m. In total, Persistent Systems insiders bought more than they sold over the last year. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
Persistent Systems is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Persistent Systems Insiders Bought Stock Recently
Over the last three months, we've seen significant insider buying at Persistent Systems. In total, insiders bought ₹30m worth of shares in that time, and we didn't record any sales whatsoever. This is a positive in our book as it implies some confidence.
Insider Ownership
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It's great to see that Persistent Systems insiders own 54% of the company, worth about ₹24b. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.