Don't Ignore The Insider Selling In Eagers Automotive \

Some Eagers Automotive Limited (ASX:APE) shareholders may be a little concerned to see that the Non-Executive Director, Michelle Prater, recently sold a substantial AU$3.5m worth of stock at a price of AU$14.20 per share. That's a big disposal, and it decreased their holding size by 20%, which is notable but not too bad.

View our latest analysis for Eagers Automotive

The Last 12 Months Of Insider Transactions At Eagers Automotive

In fact, the recent sale by Michelle Prater was the biggest sale of Eagers Automotive shares made by an insider individual in the last twelve months, according to our records. So it's clear an insider wanted to take some cash off the table, even below the current price of AU$14.59. 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. This single sale was just 20% of Michelle Prater's stake.

In the last twelve months insiders purchased 350.00k shares for AU$4.3m. But insiders sold 246.51k shares worth AU$3.5m. In the last twelve months there was more buying than selling by Eagers Automotive insiders. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

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. A high insider ownership often makes company leadership more mindful of shareholder interests. Eagers Automotive insiders own about AU$328m worth of shares (which is 8.8% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The Eagers Automotive Insider Transactions Indicate?

An insider sold Eagers Automotive shares recently, but they didn't buy any. On the other hand, the insider transactions over the last year are encouraging. We are also comforted by the high levels of insider ownership. So the recent selling doesn't worry us. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For instance, we've identified 4 warning signs for Eagers Automotive (1 makes us a bit uncomfortable) you should be aware of.

But note: Eagers Automotive may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.