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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 Genuine Parts Company (NYSE:GPC), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Genuine Parts Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by Executive Vice President of U.S. Automotive Parts Group Lee Maher for US$278k worth of shares, at about US$92.60 per share. That means that an insider was selling shares at slightly below the current price (US$99.82). Even though it doesn’t necessarily mean anything, that’s certainly not a positive sign, in our book. As a general rule we consider it to be discouraging when insiders are selling below the current price. We note that the biggest single sale was only 5.9% of Lee Maher’s holding.
In total, Genuine Parts insiders sold more than they bought over the last year. They sold for an average price of about US$93.37. It’s not particularly great to see insiders were selling shares around current prices. While some insiders have decided to take some money off the table, we wouldn’t put too much weight on this fact. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Genuine Parts Have Bought Stock Recently
Over the last quarter, Genuine Parts insiders have spent a meaningful amount on shares. John Holder spent US$50k on stock, and there wasn’t any selling. This could be interpreted as suggesting a positive outlook.
Insider Ownership of Genuine Parts
Many investors like to check how much of a company is owned by insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It appears that Genuine Parts insiders own 0.7% of the company, worth about US$97m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Does This Data Suggest About Genuine Parts Insiders?
The recent insider purchase is heartening. However, the longer term transactions are not so encouraging. The more recent transactions are a positive, but Genuine Parts insiders haven’t shown the sustained enthusiasm that we look for, although they do own a decent number of shares, overall. In short they are likely aligned with shareholders. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Genuine Parts.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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 firstname.lastname@example.org.