I saw this post on Reddit which analyses insider trades filed with the SEC for investment ideas and tried to replicate this for insider trades files with the NSE. Here are the results if you want to jump right in. The code and data are available here

We filter companies with market cap greater than INR 5000 cr (to weed out risky small caps) and consider buying only by the following people. -

  • Employees/Designated Employees
  • Immediate relative
  • Director
  • Key Managerial Personnel

Here are the top 10 companies, sorted by their average 12 month return.

Company Avg 1 Month Return (%) Avg 3 Month Return (%) Avg 6 Month Return (%) Avg 12 Month Return (%)
TANLA 23.03 95.72 412.17 1,084.34
AARTIDRUGS 7.08 -12.38 121.93 386.36
TATAMOTORS 9.79 37.86 111.07 333.57
JSWSTEEL 22.74 49.30 105.17 241.74
DALBHARAT -0.56 33.63 50.97 208.60
CYIENT 10.59 49.20 72.44 201.09
LAURUSLABS 19.53 31.13 82.34 186.80
DIXON 5.45 17.60 27.80 175.51
TATASTEEL 9.61 19.35 47.24 161.29
CHOLAFIN 14.67 30.87 84.14 159.62
FSL -22.63 -21.74 35.94 146.27

How do I use this ?

There are a few ways in which this data can be used.

  • If you are looking to buy a company for long term but waiting for right time, insider buying can indicate a strong positive sentiment. We see that insiders enter during stock downturn, which implies they are bullish on the company over long term.
  • This can also help with short term positions. In some companies, insider buying can reflect in the share price within a month. If you sort returns by average 1 month return, you can see these companies. Few examples - SRF, JUBLPHARMA, TATACONSUM, AJANTPHARM, TANLA, JSWSTEEL, BRIGADE, JUBLFOOD, LAURUSLABS, BRITANNIA. Depending on your horizon, you can invest on companies which have a turnaround within that time horizon. Be advised that this will be a short term position only. Over the long term, you might want to look into company financials and its history.