Hope you are doing well.
In today’s post, we will share with you an important concept that can help you build a watchlist of stocks and further identify great investment opportunities for your portfolio.
List of companies where Promoters increased their stake in Nov'21
Please find attached list of promoter purchases for the month of Nov’21 - LINK
On clicking the link, you will find the details in the master sheet in the below format
Unlike insider trading which is illegal, we are talking about purchases of shares by the promoters, promoter’s relatives, directors, etc in their own company from the open market.
When the above entities buy shares from the open market, they basically increase their stake in the company.
So, what’s so good about it?
Well, unlike you and me, promoters are the ones running the operations of the company.
They have first-hand knowledge about the industry, about their own business, growth prospects and are also the biggest beneficiaries of the improvement in the performance of the company and also the stock price.
So, when they start buying shares from the open market, you should take notice of the same.
Peter Lynch, one of the best-known fund managers, said something along the following lines:
Insiders/promoters buy a stock only when they are confident of the company’s long- term prospects
You know what, looking at promoters buying in bulk during covid-19 Mar’20 correction is what gave us confidence to buy shares when there was panic all around.
Important points -
- Increase in stake by the promoters is a good sign; however, it cannot be relied upon in isolation and one must do further due diligence
- Higher the increase in stake, better it is from investor’s perspective
- Consistent increase over several quarters is also a very good sign
- We like open market purchases more than preferential allotments
- Sometimes, there could be inter-se transfers, so they don’t mean anything at all because the overall stake remains the same; unless there’s a settlement of dispute between the promoters
Hope you find the list and the pointers useful and are able to identify good stocks ideas for your investment.