Selling ₹151m Of AAA Technologies Stock Rewarded Insiders

While AAA Technologies Limited (NSE:AAATECH) shareholders have had a good week with the stock up 12%, they shouldn't let their guards down. In spite of the relatively cheap prices, insiders made the decision to sell ₹151m worth of stock in the last 12 months. This could be a warning indicator of vulnerabilities in the future.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

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AAA Technologies Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Chairman & MD, Anjay Agarwal, for ₹65m worth of shares, at about ₹90.48 per share. That means that even when the share price was below the current price of ₹107, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 43% of Anjay Agarwal's holding. Anjay Agarwal was the only individual insider to sell over the last year.

Anjay Agarwal divested 1.73m shares over the last 12 months at an average price of ₹87.38. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

View our latest analysis for AAA Technologies

I will like AAA Technologies better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

AAA Technologies Insiders Are Selling The Stock

The last quarter saw substantial insider selling of AAA Technologies shares. In total, Chairman & MD Anjay Agarwal dumped ₹106m 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.

Insider Ownership Of AAA Technologies

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. AAA Technologies insiders own about ₹513m worth of shares. That equates to 38% 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 Do The AAA Technologies Insider Transactions Indicate?

An insider hasn't bought AAA Technologies stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing AAA Technologies. For instance, we've identified 4 warning signs for AAA Technologies (1 can't be ignored) you should be aware of.

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For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.