Promoter’s stake is always a center of attraction for investors. These solid reasons why company promoters increasing stake can provide valuable clues.
Promoters are actively involved in the formation, organization & financing of a corporation. They are usually the biggest & most clued investors of a publicly listed company.
Like small investors, promoters can also accumulate or distribute shares of a company. Their transactions can have long lasting effects on the overall share price of a company.
According to a post published in Business Today, an increase in stake by promoters is seen as positive for the stock price.
It is especially true if the purchase is done through open market, or preferential allotment, or by conversion into equity shares at a price higher than market price. Investors can take cues from such management’s activity in stock markets. Here are 15 solid reasons why company promoters accumulating shares of a given script:
[You can also watch an exciting video on this post from GetUpWise channel on YouTube.]
(1) Rewarding Shareholders Of The Company
It is one of the most common reasons why company promoters increasing stake in a given equity. Every big transaction can trigger wild moves in a script. If a big investors starts buying a stock then its share price is likely to appreciate in short to medium term.
On the other hand, when a big investor starts selling a stock then its share price is likely to crash. Promoters are also big investors in a given script. When one or more promoters start buying shares of their company then its share price is likely to increase in the short term.
It is a wonderful step to reward the new & existing shareholders of the company. Thus, small investors should keep a track of such companies where promoters buy shares from time-to-time to reward its shareholders.
Image Source: Shutterstock