With the price of CarMax, Inc. (NYSE:KMX) down 6.5% this week, insiders may find some comfort after selling US$605,000 worth of stock earlier this year.

Insiders to CarMax, Inc. (NYSE:KMX) sold $605,000 worth of shares at an average price of $92.42 per share over the past year, making the most of their investment. After the stock price fell 6.5% last week, the company’s market value fell by $998 million, but insiders were able to mitigate their losses.

While insider trading isn’t the most important thing when it comes to long-term investing, logic dictates that you should pay attention to whether insiders are buying or selling stocks.

If you’re not interested in researching KMX insider trading, we have a free list of interesting investment ideas to potentially inspire your next investment!

The last 12 months of insider trading at CarMax

Executive Vice President and Chief Information and Technology Officer Shamim Mohammad has achieved the largest insider sale in the past 12 months. This single transaction was for US$325,000 of shares at a price of US$93.91 each. This means that an insider was selling shares at around the current price of US$90.00. Although insider selling is negative, for us it is even more negative if the stock is sold at a lower price. Given that the sale took place roughly at current prices, this makes us a little cautious but is hardly a major concern.

Last year, CarMax insiders did not buy any shares of the company. You can see a visual representation of insider trading (by companies and individuals) over the past 12 months, below. By clicking on the graph below, you will be able to see the precise detail of each insider trade!

NYSE: KMX Insider Trading Volume August 27, 2022

I’d like CarMax better if I see big insider buys. In the meantime, watch this free list of growing companies with significant and recent insider buying.

CarMax insiders sell the stock

The last three months have seen significant insider selling at CarMax. Specifically, insiders gave up US$605,000 worth of shares at this time, and we did not record any purchases. In light of this, it’s hard to say that all insiders think stocks are a good deal.

Insider ownership

Another way to test alignment between a company’s executives and other shareholders is to look at how many shares they own. I think it’s a good sign if insiders have a significant number of shares in the company. Insiders own 0.4% of CarMax shares, worth approximately $57 million. We have certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest an alignment between insiders and other shareholders.

So what does this data suggest about CarMax insiders?

Insiders sold CarMax shares recently, but did not buy any. And even if we look at last year, we haven’t seen any purchases. Insider ownership is not particularly high, so this analysis makes us cautious about the company. We are in no rush to buy! While we like to know what’s going on with insider ownership and trading, we also make sure to consider the risks a stock faces before making an investment decision. Every business has risks, and we’ve spotted 3 warning signs for CarMax (of which 1 is significant!) that you should know.

Sure CarMax may not be the best stock to buy. So you might want to see this free set of high quality companies.

For the purposes of this article, insiders are persons who report their transactions to the relevant regulatory body. We currently record open market transactions and private dispositions, but not derivative transactions.

This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.

Calculation of discounted cash flows for each share

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Eleanor C. William