Over the past year, many O'Reilly Automotive, Inc. (NASDAQ:ORLY) insiders sold a significant stake in the company which may have piqued investors' interest. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

View 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$26m worth of shares at a price of US$1,126 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$1,205. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 9.4% of David O'Reilly's holding.

Insiders in O'Reilly Automotive didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

I will like O'Reilly Automotive better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

O'Reilly Automotive Insiders Are Selling The Stock

The last three months saw significant insider selling at O'Reilly Automotive. Specifically, Executive Vice Chairman David O'Reilly ditched US$6.2m worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership Of O'Reilly Automotive

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. O'Reilly Automotive insiders own 0.8% of the company, currently worth about US$578m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

What Might The Insider Transactions At O'Reilly Automotive Tell Us?

An insider sold O'Reilly Automotive shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. On the plus side, O'Reilly Automotive makes money, and is growing profits. 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. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For instance, we've identified 3 warning signs for O'Reilly Automotive (1 doesn't sit too well with us) you should be aware of.

But note: O'Reilly Automotive 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.