Recent insider trends for Advance Auto Parts, Inc. (NYSE:AAP) have caught the attention of investors. Analysts monitor insider data to understand the sentiment of a company’s largest and most important shareholders. AAP’s insider trading patterns have some implications for where the stock might be headed.
Institutions own 107.83% of Advance Auto Parts, Inc. (AAP)’s shares. The total value of these holdings, in millions, is $7,120. Among active positions in the latest quarter, 240 holders increased their positions by a total of 14.71 million shares, 226 holders decreased the positions by a total of 12.45 million shares, and 61 holders held their positions. This works out to a net increase in ownership of 2.26 million shares, and suggests that institutions are feeling bullish about the stock.
Among new and sold out positions, 45 holders initiated new positions by a total of 3.89 million shares and 87 holders exited their positions by a total of 4.55 million shares. This nets out to a decrease of 664660 shares and is another bearish sign for AAP.
In the last three months, insiders executed a total of 6 trades. 5 of these were buys and 1 were sells. Insider ownership increased by a total of 6201 shares, which suggests that AAP’s key executives are feeling more optimistic about the outlook for the stock. The data from the past twelve months tells a similar story: insiders executed 57 buys and 26 sells, and ownership increased by a net of 419557 shares.
The analysis of insider buying and selling trends can be extended to the aggregate level. Short interest, which represents the number of a stock’s shares currently being shorted, captures what the market as a whole feels about a stock. Advance Auto Parts, Inc. (NYSE:AAP)’s short interest is 6.25 million shares, or 8.54% of the float. This represents a decrease of -15% in the number of shares being shorted compared to the previous reading, and implies that investors felt less pessimistic about the stock during the past two weeks.
Insider data can help an investor form an outlook on a stock, but it’s important to supplement this data with other information such as technical indicators to form a more complete view. A composite of 13 technical indicators that includes measures such as moving averages and momentum oscillators suggests that AAP is a Strong sell, which implies that AAP is expected to underperform the market based on prior trading patterns.
Institutional ownership trends suggest that the stock is cheap and the insider trading data indicates that insiders are bullish. Technical indicators (also) suggest that Advance Auto Parts, Inc. (NYSE:AAP) is overvalued.