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It is not uncommon to see companies perform well in the years after insiders buy shares. 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 AutoNation, Inc. (NYSE:AN), 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.
We don't think shareholders should simply follow insider transactions. 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.'
AutoNation Insider Transactions Over The Last Year
In the last twelve months, the biggest single sale by an insider was when the Senior VP & Chief Accounting Officer, Christopher Cade, sold US$108k worth of shares at a price of US$42.40 per share. That means that an insider was selling shares at around the current price of US$39.77. While we don't usually like to see insider selling, it's more concerning if the sales take price at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.
Over the last year, we can see that insiders have bought 3725 shares worth US$142k. On the other hand they divested 5032 shares, for US$220k. In total, AutoNation insiders sold more than they bought over the last year. 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!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
AutoNation Insiders Are Selling The Stock
There was substantially more insider selling, than buying, of AutoNation shares over the last three months. We note insiders cashed in US$151k worth of shares. Meanwhile CEO, President & Director Carl Liebert bought US$100k worth. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.
Does AutoNation Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. AutoNation insiders own about US$472m worth of shares (which is 13% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At AutoNation Tell Us?
Unfortunately, there has been more insider selling of AutoNation stock, than buying, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. Of course, the future is what matters most. So if you are interested in AutoNation, you should check out this free report on analyst forecasts for the company.
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.
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.