Yahoo Finance Who Just Sold Their Shares In Avanti Feeds Limited (NSE:AVANTI)?
Avanti Feeds Limited manufactures, processes, exports, and supplies shrimp feeds in India, the United States, and internationally. Avanti Feeds’s insiders have divested from 172.99k shares in the large-cap stock within the past three months. It is widely considered that insider selling stock in their own companies is potentially a bearish signal. A research published in The MIT Press (1998) concluded that stocks following insider selling fell 2.7% compared to the market. However, it may not be sufficient to base your investment decision merely on these signals. I’ve analysed two possible reasons driving the insiders’ decision to reduce their investment of late.
View our latest analysis for Avanti Feeds
Which Insiders Are Selling?
More shares have been sold than bought by Avanti Feeds’s insiders in the past three months. In total, individual insiders own over 23.22 million shares in the business, which makes up around 17.05% of total shares outstanding. The insider that recently sold more shares is N. Prasad (board member) . The entity that sold on the open market in the last three months was Thai Union Group Public Company Limited. Although this is an institutional investor, rather than a company executive or board member, the insights gained from direct access to management as a large investor would make it more well-informed than the average retail investor. In this specific instance, I would classify this investor as a company insider.
Does Selling Activity Reflect Future Growth?
On the surface, Avanti Feeds’s future looks good. Delving deeper into the line items, Avanti Feeds is believed to experience a double-digit top-line growth over the next year, which is expected to drive an earnings growth rate of 18.10%. High levels of sustained revenue growth as well as improved cost management could see higher levels of future earnings. Though this buoyant outlook is counter to insider selling activities, indicating they may know something the market does not. Insiders could see the double-digit growth as not sustainable or perhaps the positive sentiment has inflated the stock.
Did Stock Price Volatility Instigate Selling?
Alternatively, the timing of these insider transactions may have been driven by share price volatility. Volatility provides an opportunity to trade on market inefficiencies when the stock is under-priced compared to the stock’s intrinsic value. In the past three months, Avanti Feeds’s share price reached a high of ₹2044.4 and a low of ₹413.1. This indicates meaningful movements in the share price with a change of 394.89%. This movement is meaningful enough to trade on if directors believe the market has mispriced their companies’ shares. Alternatively, they may simply want to diversify their holdings, distribute stock to investors, or simply require the cash for personal reasons.
Next Steps:
Avanti Feeds’s insiders’ meaningful divestments tells us that their shares have recently fallen out of favour, although the positive expected earnings growth challenges this assumption, whilst a large share price movement could provide incentive to sell now. But we must also be aware that insiders divesting may not actually be based their views on the company’s outlook. Moreover, while insider selling can be a useful prompt, following the lead of an insider, however, will never replace diligent research. I’ve compiled two relevant aspects you should look at:
Financial Health: Does Avanti Feeds have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Other High Quality Alternatives : Are there other high quality stocks you could be holding instead of Avanti Feeds? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
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 editorial-team@simplywallst.com.
