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Trade Alert: CarMax, Inc. (NYSE: KMX) Chairman William Nash Just Spent $501,000 to Buy 5.2% More Shares

techsm5

CarMax, Inc. (NYSE:KMX) shareholders (or potential shareholders) will be happy to see that Chairman William Nash recently purchased US$501,000 worth of stock, priced at US$60.98. Although this only increased the size of their holdings by 5.2%, it is still a significant change by our standards.

See our latest analysis for CarMax

CarMax insider trades over the past year

In fact, the recent purchase by William Nash was the largest purchase of CarMax stock by an insider in the past twelve months, according to our records. This means that an insider was happy to buy shares at around the current price of US$65.12. This means that they have been optimistic about the company in the past, although they may have changed their minds. We always like to see insider buying, but it’s worth noting if those buys were made well below the current stock price, as the discount to value may have diminished as the price rose. Fortunately, the CarMax insider decided to buy shares at prices close to current prices. William Nash was the only individual insider to buy in the past year.

In total, insiders sold more shares of CarMax than they bought in the past year. You can see insider trading (by companies and individuals) over the past year illustrated in the table below. By clicking on the graph below, you will be able to see the precise detail of each insider trade!

insider-trading-volume
NYSE: KMX Insider Trading Volume January 5, 2023

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.

Does CarMax boast of high insider ownership?

Another way to test alignment between a company’s executives and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely insiders will be incentivized to build the company for the long term. It appears that CarMax insiders own 0.4% of the company, worth around $40 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 do CarMax insider trades indicate?

It is certainly positive to see the recent insider buying. However, longer-term trades are not so encouraging. We don’t care much about CarMax insider trading over the past year. But they own a reasonable share of the business, and there have been a few purchases recently. Overall, they seem reasonably lined up. 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 any investment decisions. To do this, you need to find out about the 2 warning signs we spotted with CarMax (including 1 that doesn’t suit us too much).

If you’d rather check out another company – one with potentially superior finances – then don’t miss this free list of interesting companies, which have a HIGH return on equity and a low indebtedness.

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.

Valuation is complex, but we help make it simple.

Find out if CarMax is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

See the free analysis

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.

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