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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. 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 before you buy or sell Edelweiss Financial Services Limited (NSE:EDELWEISS), you may well want to know whether insiders have been buying or selling.
What Is Insider Selling?
It's quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year.'
Check out our latest analysis for Edelweiss Financial Services
Edelweiss Financial Services Insider Transactions Over The Last Year
The Non-Executive Non-Independent Director, Vidya Shah, made the biggest insider sale in the last 12 months. That single transaction was for ₹388m worth of shares at a price of ₹194 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The silver lining is that this sell-down took place above the latest price (₹107). So it is hard to draw any strong conclusion from it.
Happily, we note that in the last year insiders paid ₹10m for 60000 shares. On the other hand they divested 4.8m shares, for ₹901m. In total, Edelweiss Financial Services insiders sold more than they bought over the last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Edelweiss Financial Services Insiders Are Selling The Stock
The last quarter saw substantial insider selling of Edelweiss Financial Services shares. In total, insiders dumped ₹79m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
Does Edelweiss Financial Services Boast High 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. A high insider ownership often makes company leadership more mindful of shareholder interests. It's great to see that Edelweiss Financial Services insiders own 40% of the company, worth about ₹37b. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.