Insiders were net sellers of NVR, Inc.’s (NYSE:NVR ) stock during the past year. That is, insiders sold more stock than they bought.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
Our analysis indicates that NVR is potentially undervalued!
NVR Insider Transactions Over The Last Year
Over the last year, we can see that the biggest insider sale was by the Senior VP, Daniel Malzahn, for US$6.8m worth of shares, at about US$4,422 per share. That means that an insider was selling shares at slightly below the current price (US$4,649). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it’s only a weak signal. This single sale was just 16% of Daniel Malzahn’s stake. The only individual insider seller over the last year was Daniel Malzahn.
You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Insiders At NVR Have Sold Stock Recently
Over the last three months, we’ve seen significant insider selling at NVR. In total, Senior VP Daniel Malzahn dumped US$6.8m worth of shares in that time, and we didn’t record any purchases whatsoever. Overall this makes us a bit cautious, but it’s not the be all and end all.
Does NVR Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it’s a good sign if insiders own a significant number of shares in the company. NVR insiders own about US$425m worth of shares (which is 2.9% of the company). This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.
So What Does This Data Suggest About NVR Insiders?
An insider sold NVR shares recently, but they didn’t buy any. And our longer term analysis of insider transactions didn’t bring confidence, either. But since NVR is profitable and growing, we’re not too worried by this. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn’t make us feel confident about the company. So these insider transactions can help us build a thesis about the stock, but it’s also worthwhile knowing the risks facing this company. At Simply Wall St, we’ve found that NVR has 2 warning signs (1 can’t be ignored!) that deserve your attention before going any further with your analysis.
But note: NVR may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
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, but not derivative transactions.
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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.