Have Insiders Been Selling Avis Budget Group, Inc. (NASDAQ:CAR) Shares?

We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So before you buy or sell Avis Budget Group, Inc. (NASDAQ:CAR), you may well want to know whether insiders have been buying or selling.

What Is Insider Buying?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

Check out our latest analysis for Avis Budget Group

The Last 12 Months Of Insider Transactions At Avis Budget Group

The insider, Leonard Coleman, made the biggest insider sale in the last 12 months. That single transaction was for US$1.1m worth of shares at a price of US$42.61 each. So it's clear an insider wanted to take some cash off the table, even slightly below the current price of US$42.75. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was 73% of Leonard Coleman's holding.

Happily, we note that in the last year insiders paid US$417k for 26.00k shares. On the other hand they divested 27.47k shares, for US$1.1m. Over the last year we saw more insider selling of Avis Budget Group shares, than buying. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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

Insider Ownership of Avis Budget Group

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. Insiders own 1.4% of Avis Budget Group shares, worth about US$42m. 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 Avis Budget Group Tell Us?

It doesn't really mean much that no insider has traded Avis Budget Group shares in the last quarter. Still, the insider transactions at Avis Budget Group in the last 12 months are not very heartening. But it's good to see that insiders own shares in the company. 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. For example, Avis Budget Group has 3 warning signs (and 1 which is a bit unpleasant) we think you should know about.

Of course Avis Budget Group 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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This article by Simply Wall St is general in nature. 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.
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