The fact that multiple O'Reilly Automotive, Inc. (NASDAQ:ORLY) insiders offloaded a considerable amount of shares over the past year could have raised some eyebrows amongst investors. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, if numerous insiders are selling, shareholders should investigate more.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
See our latest analysis for O'Reilly Automotive
The Last 12 Months Of Insider Transactions At O'Reilly Automotive
The Executive Vice Chairman, David O'Reilly, made the biggest insider sale in the last 12 months. That single transaction was for US$25m worth of shares at a price of US$932 each. That means that even when the share price was below the current price of US$986, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. 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. We note that the biggest single sale was only 8.9% of David O'Reilly's holding.
In the last year O'Reilly Automotive insiders didn't buy any company stock. 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!
I will like O'Reilly Automotive better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
O'Reilly Automotive Insiders Are Selling The Stock
Over the last three months, we've seen significant insider selling at O'Reilly Automotive. Specifically, insiders ditched US$2.4m worth of shares in that time, and we didn't record any purchases whatsoever. Overall this makes us a bit cautious, but it's not the be all and end all.
Insider Ownership Of O'Reilly Automotive
Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. O'Reilly Automotive insiders own about US$599m worth of shares (which is 1.0% of the company). 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 Does This Data Suggest About O'Reilly Automotive Insiders?
Insiders sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. But it is good to see that O'Reilly Automotive is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. To that end, you should learn about the 3 warning signs we've spotted with O'Reilly Automotive (including 1 which shouldn't be ignored).
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.
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.
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