Some AutoNation, Inc. (NYSE:AN) shareholders may be a little concerned to see that insider Edward Lampert recently sold a substantial US$578k worth of stock at a price of US$76.71 per share. However, that sale only accounted for 0.08% of their holding, so arguably it doesn't say much about their conviction.
AutoNation Insider Transactions Over The Last Year
In fact, the recent sale by insider Edward Lampert was not their only sale of AutoNation shares this year. They previously made an even bigger sale of -US$12m worth of shares at a price of US$45.73 per share. That means that even when the share price was below the current price of US$75.89, an insider wanted to cash in some shares. 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was only 2.7% of Edward Lampert's holding.
In total, AutoNation insiders sold more 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. By clicking on the graph below, you can see the precise details of each insider transaction!NYSE:AN Insider Trading Volume January 15th 2021
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Insider Ownership of AutoNation
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. It's great to see that AutoNation insiders own 11% of the company, worth about US$756m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At AutoNation Tell Us?
Insiders sold AutoNation shares recently, but they didn't buy any. Zooming out, the longer term picture doesn't give us much comfort. But since AutoNation is profitable and growing, we're not too worried by this. 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. Every company has risks, and we've spotted 4 warning signs for AutoNation you should know about.
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.
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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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