Possible bearish signals as O'Reilly Automotive, Inc. (NASDAQ:ORLY) insiders disposed of US$69m worth of stock

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.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

See our latest analysis for O'Reilly Automotive

O'Reilly Automotive Insider Transactions Over The Last Year

The Executive Vice Chairman, David O'Reilly, made the biggest insider sale in the last 12 months. That single transaction was for US$21m worth of shares at a price of US$835 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$860. 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. This single sale was just 7.6% of David O'Reilly's stake.

Happily, we note that in the last year insiders paid US$652k for 1.09k shares. But insiders sold 89.43k shares worth US$69m. In total, O'Reilly Automotive insiders sold more than they bought over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insiders At O'Reilly Automotive Have Sold Stock Recently

The last three months saw significant insider selling at O'Reilly Automotive. Specifically, insiders ditched US$528k 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 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. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that O'Reilly Automotive insiders own 1.0% of the company, worth about US$555m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The O'Reilly Automotive Insider Transactions Indicate?

Insiders haven't bought O'Reilly Automotive stock in the last three months, but there was some selling. Despite some insider buying, the longer term picture doesn't make us feel much more positive. But it is good to see that O'Reilly Automotive is growing earnings. 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. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing O'Reilly Automotive. Case in point: We've spotted 3 warning signs for O'Reilly Automotive you should be aware of, and 1 of these doesn't sit too well with us.

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, but not derivative transactions.

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