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5 Years : From Jul 2012 to Jul 2017
Billionaire Edward Lampert and his investment vehicles lately have been in the zone with AutoZone Inc. (AZO): the selling zone.
Filings with the Securities and Exchange Commission indicate that Lampert, his ESL Partners LP and other affiliates have brought their stake below 12.6 million shares, or about 30% of the auto-parts chain, disposing of about 5.4 million shares over the past year. Fewer than 630,000 of those shares were distributed to redeeming limited partners of ESL, but the remainder were made in open market sales between last July and Wednesday, with 1.2 million of those sold in June alone.
Because of AutoZone's long and prodigious share-repurchase program, Lampert's percentage ownership of the company is higher today than it was when he and affiliates reported peak ownership of nearly 30.7 million shares, or 27.5% of AutoZone, over a decade ago. His highest percentage ownership reported in a Schedule 13D filing was about 39%, two years ago when he reported ownership of roughly 21 million shares.
AutoZone's buyback program has been in place since the beginning of 1998 and, incidentally, ESL first reported its stake as a roughly 7% owner later that year.
A spokesman for AutoZone didn't return a phone call or email seeking comment; a spokesman on behalf of ESL declined a request to interview Lampert.
Jonathan Moreland, director of research for InsiderInsights.com, said one of the most common behaviors he sees among insiders is selling shares after a stock has performed well. Indeed, AutoZone is up more than 50% over the past 12 months and it has risen more than tenfold since Lampert began building his stake.
Because it is just "human nature" to sell after tremendous gains, Moreland said he wouldn't use sales by Lampert or other executives to suggest selling AutoZone shares short. However, it is enough to cause him to skip looking at the company as a potential purchase.
Stocks where insiders sell tend to underperform the stock market and outperform over time when insiders are buying, Moreland said. He also noted that it is not a great sign when a company is buying its stock back, which should mean it feels the shares are a bargain, when insiders are selling, which can indicate those people think the stock is more fairly valued.
Of 26 analysts who follow AutoZone tracked by FactSet Research, 17 rate the stock "hold," while 8 have "buy" or "overweight" ratings and one suggests investors "sell." The average price target for the shares is $308.74 apiece, which would top May's all-time high of $299.60 each.
-By Maxwell Murphy, Dow Jones Newswires; 212-416-2171; firstname.lastname@example.org