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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 Carborundum Universal Limited (NSE:CARBORUNIV).
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.'
Check out our latest analysis for Carborundum Universal
Carborundum Universal Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider purchase was by Executive Vice President of Human Resources M. Muthiah for ₹174m worth of shares, at about ₹355 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being ₹353). 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. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
Over the last year, we can see that insiders have bought 1.3m shares worth ₹460m. On the other hand they divested 1.3m shares, for ₹458m. Overall, Carborundum Universal insiders were net buyers last year. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Carborundum Universal is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Carborundum Universal Insiders Are Selling The Stock
The last three months saw significant insider selling at Carborundum Universal. In total, M. V. Subbiah sold ₹10m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.