Last week, Motorcar Parts of America, Inc. (NASDAQ:MPAA) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 14% last week, resulting in a US$19m increase in the company's market worth, implying a 34% gain on their initial purchase. As a result, their original purchase of US$1.17m worth of stock is now worth US$1.57m.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

View our latest analysis for Motorcar Parts of America

The Last 12 Months Of Insider Transactions At Motorcar Parts of America

Over the last year, we can see that the biggest insider purchase was by Director Douglas Trussler for US$874k worth of shares, at about US$5.86 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of US$7.92. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Happily, we note that in the last year insiders paid US$1.2m for 197.70k shares. But they sold 7.17k shares for US$63k. In total, Motorcar Parts of America insiders bought more than they sold over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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).

Insiders At Motorcar Parts of America Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Motorcar Parts of America. Not only was there no selling that we can see, but they collectively bought US$105k worth of shares. That shows some optimism about the company's future.

Insider Ownership Of Motorcar Parts of America

Many investors like to check how much of a company is owned by insiders. We usually like to see fairly high levels of insider ownership. Our data indicates that Motorcar Parts of America insiders own about US$8.9m worth of shares (which is 6.0% of the company). Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

What Might The Insider Transactions At Motorcar Parts of America Tell Us?

It is good to see recent purchasing. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Motorcar Parts of America stock. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. In terms of investment risks, we've identified 2 warning signs with Motorcar Parts of America and understanding them should be part of your investment process.

Of course Motorcar Parts of America may not be the best stock to buy. So you may wish to see this free collection of high quality 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.