07-Mar-2019 : If you are an independent stock picker, you may look into many indicators apart from fundamental analysis. In all these indicators, internal trading data is a major input. What is internal trading data? Internal trading data discloses trading of company’s share by its internal employees, directors etc. The internal trading can be both in the form of purchase and sale. Where a person can sale for any reason, e.g. need of money, it doesn’t directly say anything. However, when the internal people, more specifically the higher management or promoters, buy company’s shares, it signifies that company will perform better in the future. Though, there may be other reasons for the promoters to purchase stocks from the market to increase promoters stake. Sometime the promoters stake are increased to prevent hostile takeover. But if you do proper analysis with the insider trading data, it may give valuable input. Obviously, this should be combined with fundamental analysis of the stock.

So let us check some recent data. We collected data for the month of January, 2019 and February, 2019. Since this is the period where most of the stocks gave negative return barring few large cap stocks, the promoters might have acquired stock from the market, where they feel the stock was trading below its fair value. So, these may be stocks, where we can have our hands on as value investor after analysing future prospect of the stock.

We have sort listed few stocks where the promoters stake have been increased during the month of January and February, 2019. Based on further analysis, these stocks can be added to the portfolio.

Promoters Stake

Disclaimer : The research analyst may have positions in the stocks as on the date of writing this article.

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