carsales.com Insiders Added AU$21m Of Stock To Their Holdings \

Multiple insiders secured a larger position in carsales.com Ltd (ASX:CAR) shares over the last 12 months. This is reassuring as this suggests that insiders have increased optimism about the company's prospects.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for carsales.com

The Last 12 Months Of Insider Transactions At carsales.com

In fact, the recent sale by Co-Founder & Non Executive Director Walter Pisciotta was not their only trade of carsales.com shares this year. They previously purchased AU$12m worth of shares at a price of AU$19.95 per share. We do like to see buying, but this purchase was made at well below the current price of AU$23.35. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

Happily, we note that in the last year insiders paid AU$21m for 1.09m shares. But insiders sold 397.90k shares worth AU$8.9m. Overall, carsales.com insiders were net buyers during the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

carsales.com is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

carsales.com Insiders Bought Stock Recently

At carsales.com,over the last quarter, we have observed quite a lot more insider buying than insider selling. In total, six insiders bought AU$12m worth of shares in that time. On the other hand, Co-Founder & Non Executive Director Walter Pisciotta netted AU$1.6m by selling. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. carsales.com insiders own about AU$430m worth of shares (which is 4.9% 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.

So What Do The carsales.com Insider Transactions Indicate?

It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. When combined with notable insider ownership, these factors suggest carsales.com insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! While we like knowing 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. For example, carsales.com has 4 warning signs (and 2 which can't be ignored) we think you should know about.

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.

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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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.