Don't Ignore The Insider Selling In Legacy Housing

Some Legacy Housing Corporation (NASDAQ:LEGH) shareholders may be a little concerned to see that the Founder, Kenneth Shipley, recently sold a substantial US$830k worth of stock at a price of US$24.40 per share. However, it's crucial to note that they remain very much invested in the stock and that sale only reduced their holding by 0.4%.

Check out our latest analysis for Legacy Housing

The Last 12 Months Of Insider Transactions At Legacy Housing

Notably, that recent sale by Kenneth Shipley is the biggest insider sale of Legacy Housing shares that we've seen in the last year. That means that an insider was selling shares at slightly below the current price (US$25.11). 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. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 0.4% of Kenneth Shipley's holding.

Over the last year we saw more insider selling of Legacy Housing shares, than buying. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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Insider Ownership Of Legacy Housing

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. A high insider ownership often makes company leadership more mindful of shareholder interests. Legacy Housing insiders own about US$334m worth of shares (which is 54% 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 Legacy Housing Insiders?

An insider hasn't bought Legacy Housing stock in the last three months, but there was some selling. And our longer term analysis of insider transactions didn't bring confidence, either. But since Legacy Housing is profitable and growing, we're not too worried by this. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Legacy Housing. To that end, you should learn about the 2 warning signs we've spotted with Legacy Housing (including 1 which is concerning).

Of course Legacy Housing 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 of direct interests only, but not derivative transactions or indirect interests.

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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.