Have Insiders Sold AutoNation Shares Recently?

We wouldn't blame AutoNation, Inc. (NYSE:AN) shareholders if they were a little worried about the fact that Edward Lampert, a company insider, recently netted about US$22m selling shares at an average price of US$176. However, that sale only accounted for 3.1% of their holding, so arguably it doesn't say much about their conviction.

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The Last 12 Months Of Insider Transactions At AutoNation

In fact, the recent sale by insider Edward Lampert was not their only sale of AutoNation shares this year. Earlier in the year, they fetched US$143 per share in a -US$54m sale. That means that an insider was selling shares at slightly below the current price (US$176). 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. It is worth noting that this sale was only 8.2% of Edward Lampert's holding.

All up, insiders sold more shares in AutoNation than they bought, over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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Does AutoNation 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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. AutoNation insiders own about US$762m worth of shares (which is 11% of the company). 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 Does This Data Suggest About AutoNation Insiders?

Insiders haven't bought AutoNation stock in the last three months, but there was some selling. Zooming out, the longer term picture doesn't give us much comfort. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing AutoNation. For instance, we've identified 3 warning signs for AutoNation (1 makes us a bit uncomfortable) you should be aware of.

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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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com