Read an interesting article in Business Line on insider trading... Some excerpts.
Time for some statistics..
1. Mr. Sunil Duggal, CEO of Dabur India sold over 12,000 shares representing about 0.72% stake in the company between Jan 2 and and Jan 7. The deal should have taken place around Rs. 120/ share. The share price declined to about Rs. 85 in the crash, days later...
2. Mr. Ajay Kumar Vij, CEO of Dabur Pharma, sold around 10,000 shares in the same period. The price at which they were sold is around Rs. 87/ share. The stock price after crash was Rs. 55/ share...
3. Mr. Senthil Kumar of I-Flex (not sure of his designation.. but must be one of the directors) sold 8000 shares in the same period around Rs. 1580. Price after the crash... about Rs. 950/ share
4. Same story with Suzlon. The promoters sold over 65,000 shares in this period at around Rs. 460... the price after te crash.. Rs. 310..
5. The promoter of Crazy Infotech sold 5000 shares on Jan 10 at Rs. 206/ share. The price after the crash was Rs. 47/ share..
The interesting point is, we could have obtained the knowledge of most of these moves, with little effort and luck, before the crash itself. And this could have saved a good deal of money to many investors... But most of us dont invest the time, the market deserves...
If you can trust something in the markets it is the notion of fear and the greed. Look out for these signs. Let them not fool you. Some of the places were you can track these moves are
1. The bulk/ block trade column which is published by most financial dailies
2. http://corpfiling.co.in/insidertrading/insidertrading.aspx
7 comments:
Am wondering what's the catch here, Rangarajan? If it were so easy to track insider trading then whey dont many people do it. Cant believe that it is laziness and lack of time that is stopping them
Hey,
The catch is
1. The timing of these disclosures by the company
2. Our inability to correlate these things with the impending rise/ fall in the stock prices. This is because, these buying/ selling stuff happens most of the time and is business as usual... Its difficult to pick the right signals from these actions..
Hi Rangarajan,
You have mentioned in your profile that at ISB yor are pursuing your second MBA. Where have you done your first MBS from?
Hi Ketan,
I did my first MBA from Sri Sathya Institute of Higher Learning. I graduated in 2002
Although, principally, I understand what you are saying and why, I strongly believe that based on isolated incidents, it will be presumptous to assume Insider Trading! I am not asking you to do this but a stronger case would be if you could track the bulk deals over a period of say 2 or 3 years and if you still find causes for concern ...... then may be we could call it Insider Trading!
Hi NK,
I am not trying to suggest that these are actually illegal insider trading.
My point is, insiders for sure know more than outsiders. Hence, as shrewed investors, it will be a good idea to keep a close tab on their actions and use them as data points in our decision making
Post a Comment