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We often see insiders buying up shares in companies that perform well over the long term. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in Mold-Tek Packaging Limited (NSE:MOLDTKPAC).
What Is Insider Buying?
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 logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
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The Last 12 Months Of Insider Transactions At Mold-Tek Packaging
In the last twelve months, the biggest single sale by an insider was when Pattabhi Lakshmi sold ₹17m worth of shares at a price of ₹340 per share. That is hardly a positive sign, even though it took place above the latest price (₹236). So it may not shed much light on insider confidence at current levels. The only individual insider seller over the last year was Pattabhi Lakshmi.
Pattabhi Lakshmi ditched 80.55k shares over the year. The average price per share was ₹333. 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!
I will like Mold-Tek Packaging 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 of Mold-Tek Packaging
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. It’s great to see that Mold-Tek Packaging insiders own 43% of the company, worth about ₹3.0b. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.