Insider Buying at Advance Auto Parts

03/23/2017 2:50 am EST

Focus: INDUSTRIALS

Stephen Biggar

Director, Product Strategy, Argus Research Corporation

Insider sentiment has improved on a relative basis for a second week. While all of the major sell/buy readings calculated by Vickers remain bearish, the trend has improved noticeably, observes Stephen Biggar of Argus Research.

Thomas Greco is the president & CEO of Advance Auto Parts (AAP). Previously he spent 30 years at PepsiCo (PEP), having served as the CEO of Frito-Lay North America, responsible for the $14.8 billion snack and foods business in the U.S. and Canada.

Now at Advance Auto Parts, Mr. Greco has been adding to his position in AAP, which now stands at nearly $17 million. His holdings were acquired through multiple transactions.

He started with the non-open-market acquisition of 29,204 shares at an average purchase price of $160.94 per share. Two months later, he added 6,700 shares at an average purchase price of $150.82.

After yet another two months, Mr. Greco purchased 6,250 shares at an average purchase price of $159.56, and then in February he acquired (through a non-open market transaction) another 49,708 shares.

These shares were acquired at no cost as they were compensation for achieving certain predetermined performance conditions. Subsequent purchases have brought his total reported holdings of AAP stock to 107,936 shares.

Not only has Mr. Greco held the entirety of the shares received via compensation, he has put up well over $3 million of his own money in order to increase his position. We like that, and view his actions as a bullish indicator.

The AAP stock currently carries a fundamental BUY rating from Argus Research with a target price of $185, which implies a potential return, including the dividend, of 20%.

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