We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Carvana Co. (NYSE:CVNA), you may well want to know whether insiders have been buying or selling.
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. 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.'
Carvana Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Director Michael Maroone bought US$889k worth of shares at a price of US$44.46 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$80.86. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
Michael Maroone bought a total of 21000 shares over the year at an average price of US$44.43. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.
Insider Ownership of Carvana
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. Insiders own 0.6% of Carvana shares, worth about US$75m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Carvana Tell Us?
It doesn't really mean much that no insider has traded Carvana shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Overall we don't see anything to make us think Carvana insiders are doubting the company, and they do own shares. Of course, the future is what matters most. So if you are interested in Carvana, you should check out this free report on analyst forecasts for the company.
But note: Carvana may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.