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 Jindal Steel & Power Limited (NSE:JINDALSTEL).

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. 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.

Jindal Steel & Power Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Chief Financial Officer Deepak Sogani bought ₹5.3m worth of shares at a price of ₹178 per share. That means that an insider was happy to buy shares at above the current price of ₹89.60. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it’s very important to consider the price insiders pay for shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels. We note that Deepak Sogani was both the biggest buyer and the biggest seller.

Over the last year, we can see that insiders have bought 150.00k shares worth ₹19m. But insiders sold 30000 shares worth ₹3.5m. Overall, Jindal Steel & Power insiders were net buyers during the last year. Their average price was about ₹126. I’d consider this a positive as it suggests insiders see value at around the current price. The chart below shows insider transactions (by individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Jindal Steel & Power is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders at Jindal Steel & Power Have Bought Stock Recently

Over the last three months, we’ve seen a bit of insider buying at Jindal Steel & Power. In total, insiders bought ₹7.3m worth of shares in that time. On the other hand, Chief Financial Officer Deepak Sogani sold ₹3.5m worth of shares. While it’s good to see the insider buying, the net amount bought isn’t enough for us to gain much confidence from it.

Does Jindal Steel & Power Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. Jindal Steel & Power insiders own about ₹3.3b worth of shares. That equates to 3.6% of the company. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Jindal Steel & Power Insiders?

It’s certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. But we don’t feel the same about the fact the company is making losses. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Jindal Steel & Power. Nice! So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. You’d be interested to know, that we found 1 warning sign for Jindal Steel & Power and we suggest you have a look.