Over the past year, many Advance Auto Parts, Inc. (NYSE: AAP) Insiders sold a large stake in the company, which may have sparked investor interest. When analyzing insider transactions, it is usually more useful to know if insiders are buying rather than knowing if they are selling, as the latter sends an ambiguous message. However, if many insiders are selling, shareholders should investigate further.
While we don’t think shareholders should just follow insider trading, logic dictates that you pay attention to whether insiders are buying or selling stocks.
See our latest review for Advance Auto Parts
The last 12 months of insider trading at Advance Auto Parts
The largest insider sale in the past twelve months occurred when Professional Executive Vice President Robert Cushing sold US $ 708,000 of shares at a price of US $ 202 per share. So it’s clear that an insider wanted to take money off the table, even below the current price of US $ 233. Generally, we find it disheartening when insiders sell below the current price, as it suggests they were happy with a lower valuation. However, while insider selling can be daunting at times, this is only a weak signal. It should be noted that this sale only represented 24% of Robert Cushing’s stake.
In total, Advance Auto Parts insiders sold more than they bought in the past year. The chart below shows insider trading (by businesses and individuals) over the past year. If you click on the chart, you can see all of the individual trades including the stock price, individual and date!
If you like to buy stocks that insiders buy rather than sell, then you might love this free list of companies. (Hint: the insiders bought them).
Does Advance Auto Parts pride themselves on strong insider ownership?
Another way to test the alignment between a company’s executives and other shareholders is to look at how many shares they own. We generally like to see fairly high levels of insider ownership. Advance Auto Parts insiders own approximately $ 53 million in shares. This equates to 0.4% of the business. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest an alignment between insiders and other shareholders.
So what do Advance Auto Parts insider trading indicate?
It doesn’t really mean much that no insider traded Advance Auto Parts shares in the past quarter. Still, insider trading at Advance Auto Parts over the past 12 months is not very encouraging. But it’s good to see that the insiders own shares in the company. If you are like me, you might want to ask yourself if this business will grow or shrink. Fortunately, you can check this out free report showing analysts’ forecasts for its future.
But beware : Advance Auto Parts may not be the best stock to buy. So take a look at this free list of interesting companies with high ROE and low debt.
For the purposes of this article, insiders are those persons who report their transactions to the relevant regulatory body. We currently account for open market transactions and private assignments, but not derivative transactions.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative material. Simply Wall St has no position in any of the stocks mentioned.