Insiders Sold US$8.3m Of America's Car-Mart Stock Possibly Sending Warning Sign

America's Car-Mart, Inc.'s (NASDAQ:CRMT) stock rose 17% last week, but insiders who sold US$8.3m worth of stock over the last year are probably in a more advantageous position. Selling at an average price of US$120, which is higher than the current price, may have been the wisest decision for these insiders as their investment would have been worth less now than when they sold.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for America's Car-Mart

The Last 12 Months Of Insider Transactions At America's Car-Mart

The insider, Adam Peterson, made the biggest insider sale in the last 12 months. That single transaction was for US$8.3m worth of shares at a price of US$125 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. The good news is that this large sale was at well above current price of US$70.15. So it may not tell us anything about how insiders feel about the current share price. Adam Peterson was the only individual insider to sell shares in the last twelve months.

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!

I will like America's Car-Mart 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.

Insider Ownership Of America's Car-Mart

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. America's Car-Mart insiders own about US$30m worth of shares. That equates to 7.0% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

What Might The Insider Transactions At America's Car-Mart Tell Us?

It doesn't really mean much that no insider has traded America's Car-Mart shares in the last quarter. Still, the insider transactions at America's Car-Mart in the last 12 months are not very heartening. The modest level of insider ownership is, at least, some comfort. 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. In terms of investment risks, we've identified 1 warning sign with America's Car-Mart and understanding this should be part of your investment process.

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 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.

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