While O'Reilly Automotive, Inc. (NASDAQ:ORLY) shareholders have enjoyed a good week with stock up 4.5%, they need remain vigilant. The fact that insiders chose to dispose of US$70m worth of stock in the past 12 months even though prices were relatively low could be indicative of some anticipated weakness.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for O'Reilly Automotive

The Last 12 Months Of Insider Transactions At O'Reilly Automotive

In the last twelve months, the biggest single sale by an insider was when the Executive Vice Chairman, David O'Reilly, sold US$21m worth of shares at a price of US$835 per share. That means that an insider was selling shares at around the current price of US$806. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. In this case, the big sale took place at around the current price, so it's not too bad (but it's still not a positive).

Over the last year, we can see that insiders have bought 1.09k shares worth US$652k. But they sold 91.21k shares for US$70m. In total, O'Reilly Automotive 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!

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Insiders At O'Reilly Automotive Have Sold Stock Recently

The last quarter saw substantial insider selling of O'Reilly Automotive shares. In total, insiders dumped US$9.6m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. O'Reilly Automotive insiders own 1.0% of the company, currently worth about US$519m based on the recent share price. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The O'Reilly Automotive Insider Transactions Indicate?

Insiders sold stock recently, but they haven't been buying. Zooming out, the longer term picture doesn't give us much comfort. On the plus side, O'Reilly Automotive makes money, and is growing profits. 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. 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. When we did our research, we found 3 warning signs for O'Reilly Automotive (1 doesn't sit too well with us!) that we believe deserve your full attention.

But note: O'Reilly Automotive may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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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