Credit Acceptance Corporation (CACC: US)
12-month performance: -32%
Insider activity: Bearish
Selling pattern: Selling from former CEO and 10% owner
Recent news: Large broker price target cut
Credit Acceptance Corporation is an American financial services company that specialises in subprime automobile financing. The group offers financing programmes that enable automobile dealers to sell vehicles to consumers, regardless of their credit history. The company is listed on the NASDAQ Global Select Market and currently has a market capitalisation of $5.5 billion.
We last covered Credit Acceptance Corporation in late January when the stock was trading at around $450. At the time, we said that it was concerning that major shareholder Prescott General Partners had just offloaded $75 million worth of CACC shares and CEO Brett Roberts had sold $4.2 million worth of stock late last year. Our view, in light of this selling activity, was that caution was warranted towards the stock. In hindsight, that was a good call, as the stock has fallen as low as $200 in the last week, which represents a decline of around 55% since our last report.
Taking another look at insider transaction activity here, we believe that caution is still warranted towards CACC. We say this because Prescott General Partners has continued to offload a large number of shares recently, selling around $55 million worth of stock in February and $13 million worth of stock in March so far. In addition, Founder and former CEO Donald Foss – who stepped down as a director in 2017 – has also been dumping stock recently. This month, he has sold approximately $17 million worth of shares. In our view, this selling activity is a bearish signal.