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Motorcar Parts of America, Inc. (NASDAQ:MPAA) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 12%, resulting in a US$21m rise in the company's market capitalisation, translating to a gain of 73% on their initial investment. Put another way, the original US$1.14m acquisition is now worth US$1.98m.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
The Last 12 Months Of Insider Transactions At Motorcar Parts of America
Over the last year, we can see that the biggest insider purchase was by Director Douglas Trussler for US$874k worth of shares, at about US$5.86 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$10.16. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.
Motorcar Parts of America insiders may have bought shares in the last year, but they didn't sell any. 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!
See our latest analysis for Motorcar Parts of America
Motorcar Parts of America 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.
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. Motorcar Parts of America insiders own about US$12m worth of shares. That equates to 6.3% 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 Motorcar Parts of America Tell Us?
It doesn't really mean much that no insider has traded Motorcar Parts of America shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders do have a stake in Motorcar Parts of America and their transactions don't cause us concern. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For example - Motorcar Parts of America has 1 warning sign we think you should be aware of.