Carvana (NYSE:CVNA) is in the spotlight following several insider purchases in recent weeks. Shares of CVNA stock have declined by more than 80% since 2022 kicked off, driven by lower used-car prices and operational challenges.
While the Manheim Used Vehicle Value Index, which records wholesale used-vehicle prices, has declined 6.4% year-to-date (YTD), the index is still higher by 14% year-over-year (YOY).
Despite the reduction in used-vehicle prices YTD, insiders of Carvana have been more than happy to pick up shares at discounted prices. Let’s get into the details.
Vice President Paul Breaux Buys CVNA Stock
Since March, insiders have purchased shares of Carvana in seven separate transactions. In addition, no insider has sold shares since early March.
On May 2o, Vice President of the General Counsel Paul Breaux purchased 15,000 shares of CVNA. The shares were purchased at an average price of $32.57 per share. After the transaction, Breaux directly owns 49,240 shares.
So, why exactly did Breaux make this purchase? While insiders are not required to disclose the reasoning behind purchases, they only purchase shares for one reason: they believe the price will go up. In addition, Carvana does not seem expensive at the moment. The company carries a 52-week high of $376 and is currently trading in the low $30 range. Plus, the used-car retailer currently has a price-to-sales ratio of just 0.22x. That’s even lower than the S&P 500’s price-to-sales ratio of 2.54x.
Besides Breaux, other insiders have been active with their purchases as well. On May 16, Director J. Danforth Quayle purchased 4,168 shares at an average price of $38.40 per share. The next day, he purchased an additional 18,750 shares at an average price of $39.14. In total, the two transactions amounted to just under $900,000.
Who Else Is Betting Big on Carvana?
Tracking institutional ownership is important, as these large funds provide liquidity and support for stocks. During Q1, 362 funds reported owning Carvana, a decrease of 48 funds from the prior quarter. The company’s 80% YTD decline reflects the reduction of fund ownership. Meanwhile, the institutional put/call ratio lies at 0.9, down from 0.94 during Q4. This means that more funds own call options against the company than put options. With that in mind, let’s take a look at the five largest shareholders:
- Ernest Garcia II, 10% owner: 76.47 million shares. Garcia purchased 5.1 million shares during Q1.
- Ernest Garcia III, CEO: 16.11 million shares. Garcia’s position is only accurate as of Q4 of 2020.
- T. Rowe Price (NASDAQ:TROW): 13.42 million shares. T. Rowe sold 9,414 shares during Q1.
- FMR: 10.43 million shares. FMR purchased 1.14 million shares during Q1.
- Baillie Gifford: 9.48 million shares. Baillie sold 172,972 shares during Q1.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.