It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell America's Car-Mart, Inc. (NASDAQ:CRMT), you may well want to know whether insiders have been buying or selling.
Do Insider Transactions Matter?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.'
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 Advisor & Director, William Henderson, for US$821k worth of shares, at about US$82.58 per share. So it's clear an insider wanted to take some cash off the table, even below the current price of US$94.93. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. 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. It is worth noting that this sale was only 7.7% of William Henderson's holding.
Over the last year, we can see that insiders have bought 11750 shares worth US$822k. On the other hand they divested 26550 shares, for US$2.0m. In total, America's Car-Mart insiders sold more than they bought over the last year. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
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Insiders at America's Car-Mart Have Sold Stock Recently
Over the last three months, we've seen significant insider selling at America's Car-Mart. Specifically, insiders ditched US$1.1m 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.
Does America's Car-Mart 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. We usually like to see fairly high levels of insider ownership. It appears that America's Car-Mart insiders own 6.4% of the company, worth about US$41m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The America's Car-Mart Insider Transactions Indicate?
Insiders sold America's Car-Mart shares recently, but they didn't buy any. Zooming out, the longer term picture doesn't give us much comfort. On the plus side, America's Car-Mart makes money, and is growing profits. While insiders do own shares, they don't own a heap, and they have been selling. So we'd only buy after careful consideration. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for America's Car-Mart.
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