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We often see insiders buying up shares in companies that perform well over the long term. 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 JM Financial Limited (NSE:JMFINANCIL).
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 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. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
See our latest analysis for JM Financial
The Last 12 Months Of Insider Transactions At JM Financial
Over the last year, we can see that the biggest insider purchase was by Group MD & Director Vishal Kampani for ₹13m worth of shares, at about ₹88.46 per share. So it’s clear an insider wanted to buy, even at a higher price. 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. That purchase may suggest an expectation of positive returns over the long term.
Happily, we note that in the last year insiders paid ₹79m for 917.91k shares. But insiders sold 288.10k shares worth ₹32m. Overall, JM Financial insiders were net buyers last year. They paid about ₹86.22 on average. It’s great to see insiders putting their own cash into the company’s stock, albeit at below the recent share price (₹86.90). 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 alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
JM Financial Insiders Are Selling The Stock
Over the last three months, we’ve seen notably more insider selling, than insider buying, at JM Financial. In that time, insiders dumped ₹11m worth of shares. On the other hand we note Vishal Kampani bought ₹3.8m worth of shares. Because the selling vastly outweighs the buying, we’d say this is a somewhat bearish sign.
Does JM Financial Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. JM Financial insiders own about ₹22b worth of shares (which is 29% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.