Insiders Of 2 Cheap Cars Group Make A Tidy Sum Selling At NZ$0.27

Despite the fact that 2 Cheap Cars Group Limited (NZSE:2CC) stock rose 13% last week, insiders who sold NZ$549k worth of stock in the previous 12 months are likely to be better off. Selling at an average price of NZ$0.27, which is higher than the current price, may have been the best move for these insiders because their investment would have been worth less now than when they sold.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for 2 Cheap Cars Group

2 Cheap Cars Group Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Co-Founder, Eugene Williams, sold NZ$211k worth of shares at a price of NZ$0.29 per share. That means that an insider was selling shares at slightly below the current price (NZ$0.88). 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. We note that the biggest single sale was only 5.2% of Eugene Williams's holding.

Happily, we note that in the last year insiders paid NZ$251k for 477.27k shares. But insiders sold 2.03m shares worth NZ$549k. In total, 2 Cheap Cars Group insiders sold more than they bought over the last year. The sellers received a price of around NZ$0.27, on average. It's not particularly great to see insiders were selling shares at below recent prices. But we wouldn't put too much weight on the insider selling. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

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. We usually like to see fairly high levels of insider ownership. 2 Cheap Cars Group insiders own about NZ$21m worth of shares (which is 52% 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 2 Cheap Cars Group Insider Transactions Indicate?

There haven't been any insider transactions in the last three months -- that doesn't mean much. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of 2 Cheap Cars Group insider transactions don't fill us with confidence. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing 2 Cheap Cars Group. Our analysis shows 3 warning signs for 2 Cheap Cars Group (1 is significant!) and we strongly recommend you look at them before investing.

Of course 2 Cheap Cars Group may not be the best stock to buy. So you may wish to see this free collection of high quality 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.