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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 HDFC Life Insurance Company Limited (NSE:HDFCLIFE).
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 don’t think shareholders should simply follow insider transactions. 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.’
See our latest analysis for HDFC Life Insurance
HDFC Life Insurance Insider Transactions Over The Last Year
Subrat Mohanty made the biggest insider sale in the last 12 months. That single transaction was for ₹276m worth of shares at a price of ₹395 each. So we know that an insider sold shares at around the present share price of ₹352. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment.
Over the last year, we can see that insiders have bought 130.41k shares worth ₹35m. But insiders sold 8.22m shares worth ₹3.6b. In total, HDFC Life Insurance insiders sold more than they bought over the last year. The sellers received a price of around ₹437, on average. We are not joyful about insider selling. However, we do note that the average sale price was significantly higher than the current share price (which is ₹352). You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders at HDFC Life Insurance Have Sold Stock Recently
Over the last three months, we’ve seen significant insider selling at HDFC Life Insurance. In total, insiders dumped ₹1.1b 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 directors think that the shares are a bargain.