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Group 1 Automotive, Inc. (NYSE:GPI) Insiders Have Been Selling

It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So before you buy or sell Group 1 Automotive, Inc. (NYSE:GPI), you may well want to know whether insiders have been buying or selling.

What Is Insider Selling?

It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.

We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’

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Group 1 Automotive Insider Transactions Over The Last Year

Regional Vice President of Brazil & Director Lincoln da Cunha Pereira Filho made the biggest insider sale in the last 12 months. That single transaction was for US$2.0m worth of shares at a price of US$79.88 each. While the sale doesn’t make us feel confident, we do note it was conducted at a price well above the current share price, which is US$61.38. So it may not tell us anything about how insiders feel about the current share price.

We note that in the last year insiders divested 48.20k shares for a total of US$3.8m. In total, Group 1 Automotive insiders sold more than they bought over the last year. The sellers received a price of around US$78.84, on average. We are not joyful about insider selling. However, we do note that the average sale price was significantly higher than the current share price (which is US$61.38). You can see the insider transactions (by 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!

NYSE:GPI Insider Trading January 20th 19
NYSE:GPI Insider Trading January 20th 19

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insider Ownership of Group 1 Automotive

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it’s a good sign if insiders own a significant number of shares in the company. It appears that Group 1 Automotive insiders own 6.1% of the company, worth about US$69m. 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 Does This Data Suggest About Group 1 Automotive Insiders?

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 Group 1 Automotive insiders. The modest level of insider ownership is, at least, some comfort. Therefore, you should should definitely take a look at this FREE report showing analyst forecasts for Group 1 Automotive.

Of course Group 1 Automotive may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.