We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Auto Trader Group plc (LON:AUTO).
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, most countries require that the company discloses such transactions to the market.
We don’t think shareholders should simply follow insider transactions. 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.’
Auto Trader Group Insider Transactions Over The Last Year
CEO & Executive Director Trevor Mather made the biggest insider sale in the last 12 months. That single transaction was for UK£2.1m worth of shares at a price of UK£4.52 each. So it’s clear an insider wanted to take some cash off the table, even below the current price of UK£4.75. While sellers have a variety of reasons for selling, this isn’t particularly great to see. We generally consider it a negative if insiders have been selling on market, especially if they did so below the current price. Please note, however, that this single sale was just 3.8% of Trevor Mather’s stake. Trevor Mather was the only individual insider to sell over the last year.
You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
I will like Auto Trader Group 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 Auto Trader Group Boast High Insider Ownership?
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it’s a good sign if insiders own a significant number of shares in the company. Auto Trader Group insiders own 2.3% of the company, currently worth about UK£102m 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 Do The Auto Trader Group Insider Transactions Indicate?
An insider sold Auto Trader Group shares recently, but they didn’t buy any. And even if we look to the last year, we didn’t see any purchases. But it is good to see that Auto Trader Group is growing earnings. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn’t make us feel confident about the company. Of course, the future is what matters most. So if you are interested in Auto Trader Group, you should check out this free report on analyst forecasts for the company.
If you would prefer to check out another company — one with potentially superior financials — then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.