Insiders Could Have Profited By Holding onto Landsea Homes Shares Despite 10.0% Drop

Despite the fact that Landsea Homes Corporation's (NASDAQ:LSEA) value has dropped 10.0% in the last week insiders who sold US$1.5m worth of stock in the past 12 months have had less success. Given that the average selling price of US$11.60 is still lower than the current share price, insiders would probably have been better off keeping their shares.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Landsea Homes

The Last 12 Months Of Insider Transactions At Landsea Homes

The Independent Director, Elias Farhat, made the biggest insider sale in the last 12 months. That single transaction was for US$724k worth of shares at a price of US$12.07 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$10.44. So it is hard to draw any strong conclusion from it.

In the last twelve months insiders purchased 118.88k shares for US$1.4m. But they sold 127.33k shares for US$1.5m. Over the last year we saw more insider selling of Landsea Homes shares, than buying. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Insiders At Landsea Homes Have Sold Stock Recently

The last three months saw significant insider selling at Landsea Homes. In total, Independent Director Thomas Hartfield sold US$165k 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.

Insider Ownership Of Landsea Homes

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Landsea Homes insiders own about US$22m worth of shares. That equates to 5.7% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Landsea Homes Insiders?

An insider sold stock recently, but they haven't been buying. And our longer term analysis of insider transactions didn't bring confidence, either. While insiders do own shares, they don't own a heap, and they have been selling. We'd practice some caution before buying! While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Every company has risks, and we've spotted 4 warning signs for Landsea Homes (of which 1 is significant!) you should know about.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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 of direct interests only, but not derivative transactions or indirect interests.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.