Advance Auto Parts Independent Chairman Acquires 75% More Stock

Investors who take an interest in Advance Auto Parts, Inc. (NYSE:AAP) should definitely note that the Independent Chairman, Eugene Lee, recently paid US$34.15 per share to buy US$500k worth of the stock. That certainly has us anticipating the best, especially since they thusly increased their own holding by 75%, potentially signalling some real optimism.

Check out our latest analysis for Advance Auto Parts

Advance Auto Parts Insider Transactions Over The Last Year

In fact, the recent purchase by Eugene Lee was the biggest purchase of Advance Auto Parts shares made by an insider individual in the last twelve months, according to our records. That implies that an insider found the current price of US$36.52 per share to be enticing. That means they have been optimistic about the company in the past, though they may have changed their mind. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. The good news for Advance Auto Parts share holders is that insiders were buying at near the current price.

Happily, we note that in the last year insiders paid US$1.6m for 30.17k shares. But insiders sold 3.13k shares worth US$216k. In the last twelve months there was more buying than selling by Advance Auto Parts insiders. They paid about US$52.20 on average. This is nice to see since it implies that insiders might see value around current prices. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Advance Auto Parts is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Insider Ownership Of Advance Auto Parts

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. Insiders own 0.7% of Advance Auto Parts shares, worth about US$15m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Advance Auto Parts Insiders?

The recent insider purchases are heartening. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Insiders likely see value in Advance Auto Parts shares, given these transactions (along with notable insider ownership of 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. In terms of investment risks, we've identified 1 warning sign with Advance Auto Parts and understanding it should be part of your investment process.

Of course Advance Auto Parts 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.