Insiders sold LKQ Corporation (NASDAQ:LKQ) stock at a low of US$50.75 , meanwhile current prices stay relatively expensive at US$55.73

By
Simply Wall St
Published
December 18, 2021
NasdaqGS:LKQ
Source: Shutterstock

LKQ Corporation's (NASDAQ:LKQ) value has fallen 3.9% in the last week, but insiders who sold US$91k worth of stock over the last year have had less success. The average selling price of US$50.75 is still lower than the current share price, or in other words, insiders would have been better off holding on to their shares.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

See our latest analysis for LKQ

LKQ Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Independent Director, Meg Divitto, for US$91k worth of shares, at about US$50.75 per share. That means that even when the share price was below the current price of US$55.73, an insider wanted to cash in some shares. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. We note that the biggest single sale was only 16% of Meg Divitto's holding. Meg Divitto was the only individual insider to sell over the last year.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
NasdaqGS:LKQ Insider Trading Volume December 18th 2021

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

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. It's great to see that LKQ insiders own 0.7% of the company, worth about US$112m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Do The LKQ Insider Transactions Indicate?

It doesn't really mean much that no insider has traded LKQ shares in the last quarter. While we feel good about high insider ownership of LKQ, we can't say the same about the selling of shares. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 1 warning sign for LKQ you should be aware of.

But note: LKQ 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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