We'd be surprised if AutoNation, Inc. (NYSE:AN) shareholders haven't noticed that the Executive VP, C. Coleman Edmunds, recently sold US$442k worth of stock at US$117 per share. The eyebrow raising move amounted to a reduction of 20% in their holding.
The Last 12 Months Of Insider Transactions At AutoNation
The insider, Edward Lampert, made the biggest insider sale in the last 12 months. That single transaction was for US$33m worth of shares at a price of US$104 each. That means that an insider was selling shares at slightly below the current price (US$117). 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. We note that the biggest single sale was only 3.4% of Edward Lampert's holding.
AutoNation insiders didn't buy any shares over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
I will like AutoNation better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Does AutoNation Boast High 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. We usually like to see fairly high levels of insider ownership. AutoNation insiders own 13% of the company, currently worth about US$1.1b based on the recent share price. 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 Does This Data Suggest About AutoNation Insiders?
Insiders sold stock recently, but they haven't been buying. Looking to the last twelve months, our data doesn't show any insider buying. But it is good to see that AutoNation is growing earnings. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. While we like knowing 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. Be aware that AutoNation is showing 3 warning signs in our investment analysis, and 1 of those is a bit concerning...
Of course AutoNation 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, but not derivative transactions.
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