When a single insider purchases stock, it is typically not a major deal. However, when multiple insiders purchase stock, like in Advance Auto Parts, Inc.'s (NYSE:AAP) instance, it's good news for shareholders.

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 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. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$36.74). Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

Happily, we note that in the last year insiders paid US$970k for 12.26k shares. But insiders sold 1.86k shares worth US$160k. In the last twelve months there was more buying than selling by Advance Auto Parts insiders. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership Of Advance Auto Parts

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. Advance Auto Parts insiders own about US$14m worth of shares. That equates to 0.6% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The Advance Auto Parts Insider Transactions Indicate?

The fact that there have been no Advance Auto Parts insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. Insiders own shares in Advance Auto Parts and we see no evidence to suggest they are worried about the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Advance Auto Parts. Our analysis shows 2 warning signs for Advance Auto Parts (1 is significant!) and we strongly recommend you look at these before investing.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.