In the last year, many Credit Acceptance Corporation (NASDAQ:CACC) insiders sold a substantial stake in the company which may have sparked shareholders' attention. 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, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The Last 12 Months Of Insider Transactions At Credit Acceptance
Over the last year, we can see that the biggest insider sale was by the Chief Analytics Officer, Arthur Smith, for US$2.4m worth of shares, at about US$426 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$546. 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. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was 92% of Arthur Smith's holding.
Insiders in Credit Acceptance didn't buy any shares in the last year. You can see a visual depiction of insider transactions (by companies and 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 Credit Acceptance better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Credit Acceptance Insiders Are Selling The Stock
The last three months saw significant insider selling at Credit Acceptance. In total, insiders dumped US$987k 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 Credit Acceptance
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Credit Acceptance insiders own 14% of the company, currently worth about US$942m 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 Credit Acceptance Insider Transactions Indicate?
Insiders haven't bought Credit Acceptance stock in the last three months, but there was some selling. And there weren't any purchases to give us comfort, over the last year. 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. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Credit Acceptance. Every company has risks, and we've spotted 2 warning signs for Credit Acceptance you should know about.
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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