It is kamara or pacheconot 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 shareholders might well want to know whether insiders have been buying or selling shares in

N.K Industries Limited

(

NSE:NKIND

).

Do Insider Transactions Matter?

It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. 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 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 N.K Industries

N.K Industries Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when MD & Director Nileshbhai Patel bought ₹7.7m worth of shares at a price of ₹45.30 per share. So it’s clear an insider wanted to buy, at around the current price. Of course they may have changed their mind. But this suggests they are optimistic. We generally consider it a positive if insiders have been buying on market, even if the share price has increased a bit since then. Nileshbhai Patel was the only individual insider to buy shares in the last twelve months.

Nileshbhai Patel bought 245.87k shares over the last 12 months at an average price of ₹46.77. You can see a visual depiction of insider transactions over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

NSEI:NKIND Insider Trading January 3rd 19

If you are like me, then you will

not

want to miss this

free

list of growing companies that insiders are 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. We usually like to see fairly high levels of insider ownership. N.K Industries insiders own 75% of the company, currently worth about ₹207m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The N.K Industries Insider Transactions Indicate?

The fact that there have been no N.K Industries insider transactions recently certainly doesn’t bother us. But insiders have shown more of an appetite for the stock, over the last year. Judging from their transactions, and high insider ownership, N.K Industries insiders feel good about the company’s future. To put this in context, take a look at how a company has performed in the past. You can access

this

detailed graph

of past earnings, revenue and cash flow

.

Story continues

But note:

N.K Industries may not be the best stock to buy

. So take a peek at this

free

list of interesting companies with high ROE and low debt.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at

[email protected]

.

View comments