Despite a 14% gain in America's Car-Mart, Inc.'s (NASDAQ:CRMT) stock price this week, shareholders shouldn't let up. Even though stock prices were relatively low, insiders elected to sell US$8.3m worth of stock in the last year, which could indicate some expected downturn.
While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.
America's Car-Mart Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the insider, Adam Peterson, for US$8.3m worth of shares, at about US$125 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (US$69.42). So it may not tell us anything about how insiders feel about the current share price. Adam Peterson was the only individual insider to sell shares in the last twelve months. Notably Adam Peterson was also the biggest buyer, having purchased US$31k worth of shares.
You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
Does America's Car-Mart Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that America's Car-Mart insiders own 6.8% of the company, worth about US$30m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.
What Might The Insider Transactions At America's Car-Mart Tell Us?
There haven't been any insider transactions in the last three months -- that doesn't mean much. We don't take much encouragement from the transactions by America's Car-Mart insiders. The modest level of insider ownership is, at least, some comfort. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Every company has risks, and we've spotted 2 warning signs for America's Car-Mart (of which 1 is a bit unpleasant!) you should know about.
But note: America's Car-Mart 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 of direct interests only, but not derivative transactions or indirect interests.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.