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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 Music Broadcast Limited (NSE:RADIOCITY).
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We don't think shareholders should simply follow insider transactions. 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.'
View our latest analysis for Music Broadcast
The Last 12 Months Of Insider Transactions At Music Broadcast
Over the last year, we can see that the biggest insider sale was by the Non-Executive Director, Apurva Purohit, for ₹52m worth of shares, at about ₹58.00 per share. That means that even when the share price was slightly below the current price of ₹58.20, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 14.7% of Apurva Purohit's holding.
We note that in the last year insiders divested 1.1m shares for a total of ₹61m. In the last year Music Broadcast insiders didn't buy any company stock. 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 are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Music Broadcast Insiders Are Selling The Stock
The last three months saw significant insider selling at Music Broadcast. In total, insiders dumped ₹61m 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 insiders think that the shares are a bargain.