Tri Pointe Homes, Inc.’s (NYSE:TPH)) market cap declines to US$1.8b but insiders who sold US$11m stock were able to hedge their losses

By selling US$11m worth of Tri Pointe Homes, Inc. (NYSE:TPH) stock at an average sell price of US$24.18 over the last year, insiders seemed to have made the most of their holdings. The company’s market valuation decreased by US$345m after the stock price dropped 16% over the past week, but insiders were spared from painful losses.

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.

See our latest analysis for Tri Pointe Homes

The Last 12 Months Of Insider Transactions At Tri Pointe Homes

Over the last year, we can see that the biggest insider sale was by the CEO & Non-Independent Director, Douglas Bauer, for US$5.6m worth of shares, at about US$24.14 per share. While we don’t usually like to see insider selling, it’s more concerning if the sales take place at a lower price. The good news is that this large sale was at well above current price of US$17.70. So it may not shed much light on insider confidence at current levels.

Tri Pointe Homes insiders didn’t buy any shares over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Does Tri Pointe Homes Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Tri Pointe Homes insiders own about US$30m worth of shares. That equates to 1.6% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At Tri Pointe Homes Tell Us?

The fact that there have been no Tri Pointe Homes insider transactions recently certainly doesn’t bother us. Still, the insider transactions at Tri Pointe Homes in the last 12 months are not very heartening. But we do like the fact that insiders own a fair chunk of 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. For example – Tri Pointe Homes has 1 warning sign we think you should be aware of.

Of course Tri Pointe Homes 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, 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.