Whilst it may not be a huge deal, we thought it was good to see that the Cars.com Inc. (NYSE:CARS) Co-Founder, T. Vetter, recently bought US$96k worth of stock, for US$5.77 per share. However, we do note that it only increased their holding by 6.6%, and it wasn't a huge purchase by absolute value, either.
The Last 12 Months Of Insider Transactions At Cars.com
In fact, the recent purchase by Co-Founder T. Vetter was not their only acquisition of Cars.com shares this year. They previously made an even bigger purchase of US$204k worth of shares at a price of US$10.19 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$5.77). While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
Cars.com insiders may have bought shares in the last year, but they didn't sell any. The average buy price was around US$8.95. I'd consider this a positive as it suggests insiders see value at around the current price. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
Cars.com is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
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. From looking at our data, insiders own US$3.1m worth of Cars.com stock, about 0.8% of the company. We prefer to see high levels of insider ownership.
So What Does This Data Suggest About Cars.com Insiders?
It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss last year, which makes us a little cautious. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Cars.com insiders are expecting a bright future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Our analysis shows 2 warning signs for Cars.com (1 is a bit unpleasant!) and we strongly recommend you look at them before investing.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.
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