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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 we'll take a look at whether insiders have been buying or selling shares in Tanla Solutions Limited (NSE:TANLA).
What Is Insider Selling?
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.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. 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'.
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The Last 12 Months Of Insider Transactions At Tanla Solutions
Over the last year, we can see that the biggest insider purchase was by Chairman & MD Dasari Uday Reddy for ₹67m worth of shares, at about ₹40.00 per share. That means that an insider was happy to buy shares at around the current price of ₹46.00. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. 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. Happily, the Tanla Solutions insider decided to buy shares at close to current prices. Dasari Uday Reddy was the only individual insider to buy shares in the last twelve months.
Dasari Uday Reddy purchased 4.3m shares over the year. The average price per share was ₹42.14. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Tanla Solutions is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insider Ownership of Tanla Solutions
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Tanla Solutions insiders own about ₹2.4b worth of shares. That equates to 37% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.