Michael Manley, CEO and director at AutoNation (AN) recently bought 7,000 shares. The buy increased his holdings by 46 percent, and came to a total cost of $1.014 million.
This is the first insider activity since last May, when the company’s COO bought 2,342 shares at a cost just under $259,000. Otherwise, executives and directors have been sellers of shares, as well as billion investor Eddie Lampert, who is a major holder of the stock.
Despite the large sales by insiders overall, they still own 19.2 percent of shares.
The automotive retailer is up 33 percent over the past year, far in excess of the S&P 500’s return of about 15 percent. That’s in spite of a 5 percent drop in revenue and 20 percent drop in earnings.
The sector had been under pressure going into 2022 due to a shortage of vehicles and high prices. That’s largely reversing as supply chains have improved and higher financing costs are reducing demand for cars – new or pre-owned.
Action to take: Shares may continue to move higher in the short-term. However, if higher interest rates impact earnings, the stock may start to trend lower, but that could be months away.
For traders, AutoNation is in a strong uptrend that’s likely to continue. The October $165 calls, last going for about $7.25, could see mid-double-digit returns in the months ahead.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.