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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 Fairchem Speciality Limited (NSE:FAIRCHEM), you may well want to know whether insiders have been buying or selling.
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, rules govern insider transactions, and certain disclosures are required.
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.’
View our latest analysis for Fairchem Speciality
Fairchem Speciality Insider Transactions Over The Last Year
Chairman of the Board Utkarsh Shah made the biggest insider sale in the last 12 months. That single transaction was for ₹133m worth of shares at a price of ₹380 each. That means that an insider was selling shares at slightly below the current price (₹393). While their view may have changed since they sold, this isn’t a particularly bullish sign. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price. We note that the biggest single sale was 93.3% of Utkarsh Shah’s holding.
We note that in the last year insiders divested 530.55k shares for a total of ₹203m. All up, insiders sold more shares in Fairchem Speciality than they bought, over the last year. The sellers received a price of around ₹383, on average. It’s not ideal to see that insiders have sold at around the current price. Since insiders sell for many reasons, we wouldn’t put too much weight on it. 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!
I will like Fairchem Speciality better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
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. I reckon it’s a good sign if insiders own a significant number of shares in the company. It appears that Fairchem Speciality insiders own 32% of the company, worth about ₹4.4b. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.