Don't Ignore The Insider Selling In Group 1 Automotive

We wouldn't blame Group 1 Automotive, Inc. (NYSE:GPI) shareholders if they were a little worried about the fact that Daniel McHenry, the Senior VP & CFO recently netted about US$755k selling shares at an average price of US$310. However, that sale only accounted for 9.8% of their holding, so arguably it doesn't say much about their conviction.

See our latest analysis for Group 1 Automotive

Group 1 Automotive Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the CEO, President & Director, Daryl Kenningham, for US$2.5m worth of shares, at about US$263 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$308. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower 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. It is worth noting that this sale was only 18% of Daryl Kenningham's holding.

In the last year Group 1 Automotive insiders didn't buy any company stock. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Insider Ownership Of Group 1 Automotive

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Group 1 Automotive insiders own 2.3% of the company, worth about US$94m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Group 1 Automotive Tell Us?

Insiders sold Group 1 Automotive shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We'd practice some caution before buying! 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 Group 1 Automotive is showing 2 warning signs in our investment analysis, and 1 of those is potentially serious...

Of course Group 1 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.

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

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.