Insiders At O'Reilly Automotive Sold US$99m In Stock, Alluding To Potential Weakness

Many O'Reilly Automotive, Inc. (NASDAQ:ORLY) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. 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.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for O'Reilly Automotive

The Last 12 Months Of Insider Transactions At O'Reilly Automotive

Over the last year, we can see that the biggest insider sale was by the Executive Vice Chairman, David O'Reilly, for US$26m worth of shares, at about US$1,126 per share. That means that an insider was selling shares at slightly below the current price (US$1,243). We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, it's only a weak signal. This single sale was just 9.4% of David O'Reilly's stake.

In the last year O'Reilly Automotive insiders didn't buy any company stock. 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!

If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.

O'Reilly Automotive Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at O'Reilly Automotive. In total, insiders dumped US$6.9m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.

Does O'Reilly Automotive Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. O'Reilly Automotive insiders own about US$602m worth of shares (which is 0.8% 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 Does This Data Suggest About O'Reilly Automotive Insiders?

Insiders sold O'Reilly Automotive shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. But since O'Reilly Automotive is profitable and growing, we're not too worried by this. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. 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. Case in point: We've spotted 3 warning signs for O'Reilly Automotive you should be aware of, and 1 of them shouldn't be ignored.

Of course O'Reilly Automotive 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.