Possible Bearish Signals With Dream Finders Homes Insiders Disposing Stock

Over the past year, many Dream Finders Homes, Inc. (NYSE:DFH) insiders sold a significant stake in the company which may have piqued investors' interest. Knowing whether insiders are buying is usually more helpful when evaluating insider transactions, as insider selling can have various explanations. However, shareholders should take a deeper look if several insiders are selling stock over a specific time period.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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The Last 12 Months Of Insider Transactions At Dream Finders Homes

In fact, the recent sale by Founder Patrick Zalupski was not their only sale of Dream Finders Homes shares this year. They previously made an even bigger sale of -US$5.4m worth of shares at a price of US$31.77 per share. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. The silver lining is that this sell-down took place above the latest price (US$26.94). So it may not tell us anything about how insiders feel about the current share price.

In the last year Dream Finders Homes insiders didn't buy any company stock. 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!

Check out our latest analysis for Dream Finders Homes

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

Insiders At Dream Finders Homes Have Sold Stock Recently

The last three months saw significant insider selling at Dream Finders Homes. In total, insiders sold US$3.2m 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

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Dream Finders Homes insiders own about US$1.7b worth of shares (which is 69% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Dream Finders Homes Insiders?

Insiders sold Dream Finders Homes shares recently, but they didn't buy any. And there weren't any purchases to give us comfort, over the last year. On the plus side, Dream Finders Homes makes money, and is growing profits. 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. For example, Dream Finders Homes has 2 warning signs (and 1 which shouldn't be ignored) we think you should know about.

Of course Dream Finders 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 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.