We often see insiders buying up shares in companies that perform well over the long term. On the other hand,5e levitate on self we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in

Virtusa Corporation

(

NASDAQ:VRTU

).

What Is Insider Selling?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, most countries require that the company discloses such transactions to the market.

We don’t think shareholders should simply follow insider transactions. But logic dictates you should pay some attention to whether insiders are buying or selling shares. 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.’

Check out our latest analysis for Virtusa

Virtusa Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when President of Digital Business Strategy Raj Rajgopal sold US$2.0m worth of shares at a price of US$50.01 per share. So what is clear is that an insider saw fit to sell at around the current price of US$40.70. They could have a variety of motivations for selling, but it’s still not particularly encouraging to see. We generally tread carefully if insiders have been selling on market, even if they sold slightly above the current price.

We note that in the last year insiders divested 114.66k shares for a total of US$5.7m. Over the last year we saw more insider selling of Virtusa shares, than buying. The average sell price was around US$49.56. It’s not particularly great to see insiders were selling shares around current prices. But we don’t put too much weight on the insider selling, since sellers could have personal reasons. The chart below shows insider transactions over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

NasdaqGS:VRTU Insider Trading January 2nd 19

I will like Virtusa better if I see some big insider buys. While we wait, check out this

free

list of growing companies with considerable, recent, insider buying.

Insider Ownership of Virtusa

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. It’s great to see that Virtusa insiders own 8.2% of the company, worth about US$99m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

Story continues

So What Do The Virtusa Insider Transactions Indicate?

There haven’t been any insider transactions in the last three months — that doesn’t mean much. We don’t take much encouragement from the transactions by Virtusa insiders. But we do like the fact that insiders own a fair chunk of the company. Therefore, you should should definitely take a look at this

FREE

report showing analyst forecasts for Virtusa

.

Of course

Virtusa may not be the best stock to buy

. So you may wish to see this

free

collection of high quality companies.

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

[email protected]

.

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