Usually, when one insider buys stock, it might not be a monumental event. But when multiple insiders are buying like they did in the case of Advance Auto Parts, Inc. (NYSE:AAP), that sends out a positive message to the company's shareholders.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Advance Auto Parts

The Last 12 Months Of Insider Transactions At Advance Auto Parts

Over the last year, we can see that the biggest insider purchase was by Independent Director Brent Windom for US$401k worth of shares, at about US$85.34 per share. That means that even when the share price was higher than US$46.34 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Over the last year, we can see that insiders have bought 14.53k shares worth US$1.0m. But they sold 3.13k shares for US$216k. Overall, Advance Auto Parts insiders were net buyers during the last year. They paid about US$71.55 on average. These transactions suggest that insiders have considered the current price attractive. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Advance Auto Parts is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Advance Auto Parts Insiders Bought Stock Recently

At Advance Auto Parts,over the last quarter, we have observed quite a lot more insider buying than insider selling. In fact, three insiders bought US$150k worth of shares. On the other hand, Executive VP Tammy Finley netted US$56k by selling. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.

Insider Ownership

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. Advance Auto Parts insiders own about US$18m worth of shares. That equates to 0.6% of the company. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Advance Auto Parts Tell Us?

It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. Given that insiders also own a fair bit of Advance Auto Parts we think they are probably pretty confident of a bright future. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. At Simply Wall St, we've found that Advance Auto Parts has 3 warning signs (1 is a bit concerning!) that deserve your attention before going any further with your analysis.

Of course Advance Auto Parts may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.