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 we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

The Last 12 Months Of Insider Transactions At Advance Auto Parts

In the last twelve months, the biggest single purchase by an insider was when Independent Chairman Eugene Lee bought US$500k worth of shares at a price of US$57.65 per share. So it's clear an insider wanted to buy, at around the current price, which is US$59.64. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. In this case we're pleased to report that the insider purchases were made at close to current prices.

Over the last year, we can see that insiders have bought 20.93k shares worth US$1.5m. But insiders sold 1.86k shares worth US$160k. In total, Advance Auto Parts insiders bought more than they sold over the last year. Their average price was about US$70.25. This is nice to see since it implies that insiders might see value around current prices. 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!

Advance Auto Parts is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Advance Auto Parts Insiders Bought Stock Recently

Over the last three months, we've seen a bit of insider buying at Advance Auto Parts. Executive VP of Human Resources & CHRO Kristen Soler bought US$30k worth of shares in that time. We like it when there are only buyers, and no sellers. However, in this case the amount invested recently is quite small.

Does Advance Auto Parts 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. Insiders own 0.6% of Advance Auto Parts shares, worth about US$21m. 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?

We note a that there has been a bit of insider buying recently (but no selling). That said, the purchases were not large. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in Advance Auto Parts and their transactions don't cause us concern. 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. For instance, we've identified 3 warning signs for Advance Auto Parts (1 is significant) you should be aware of.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com