Consumer Portfolio Services Insiders Sell US$4.8m Of Stock, Possibly Signalling Caution

In the last year, many Consumer Portfolio Services, Inc. (NASDAQ:CPSS) insiders sold a substantial stake in the company which may have sparked shareholders' attention. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. 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, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Consumer Portfolio Services

Consumer Portfolio Services Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Independent Director, William Roberts, for US$1.1m worth of shares, at about US$10.76 per share. So what is clear is that an insider saw fit to sell at around the current price of US$10.02. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.

Insiders in Consumer Portfolio Services didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

I will like Consumer Portfolio Services better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Consumer Portfolio Services Insiders Are Selling The Stock

The last quarter saw substantial insider selling of Consumer Portfolio Services shares. In total, Independent Director William Roberts sold US$363k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Does Consumer Portfolio Services 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. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Consumer Portfolio Services insiders own 41% of the company, worth about US$90m. 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 Consumer Portfolio Services Insider Transactions Indicate?

An insider hasn't bought Consumer Portfolio Services stock in the last three months, but there was some selling. Looking to the last twelve months, our data doesn't show any insider buying. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that Consumer Portfolio Services is showing 3 warning signs in our investment analysis, and 1 of those shouldn't be ignored...

But note: Consumer Portfolio Services 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 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.