Possible Bearish Signals With CAR Group Insiders Disposing Stock

Many CAR Group Limited (ASX:CAR) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for CAR Group

The Last 12 Months Of Insider Transactions At CAR Group

In the last twelve months, the biggest single sale by an insider was when the Co-Founder & Non Executive Director, Walter Pisciotta, sold AU$4.0m worth of shares at a price of AU$35.80 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of AU$38.35. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was only 1.3% of Walter Pisciotta's holding.

Happily, we note that in the last year insiders paid AU$527k for 15.65k shares. But they sold 161.53k shares for AU$5.8m. Over the last year we saw more insider selling of CAR Group shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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Insiders At CAR Group Have Sold Stock Recently

There was substantially more insider selling, than buying, of CAR Group shares over the last three months. In that time, MD, CEO & Director Cameron McIntyre dumped AU$1.9m worth of shares. On the flip side, insiders spent AU$370k on purchasing shares. Since the selling really does outweigh the buying, we'd say that these transactions may suggest that some insiders feel the shares are not cheap.

Does CAR Group Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. We usually like to see fairly high levels of insider ownership. It's great to see that CAR Group insiders own 5.1% of the company, worth about AU$735m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

What Might The Insider Transactions At CAR Group Tell Us?

The stark truth for CAR Group is that there has been more insider selling than insider buying in the last three months. Despite some insider buying, the longer term picture doesn't make us feel much more positive. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. You'd be interested to know, that we found 2 warning signs for CAR Group and we suggest you have a look.

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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an 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 account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.