This Insider Has Just Sold Shares In KB Home

Some KB Home (NYSE:KBH) shareholders may be a little concerned to see that the Executive Vice President of Real Estate & Business Development, Albert Praw, recently sold a substantial US$1.5m worth of stock at a price of US$79.18 per share. That sale reduced their total holding by 15% which is hardly insignificant, but far from the worst we've seen.

See our latest analysis for KB Home

KB Home Insider Transactions Over The Last Year

The Executive VP & CFO, Jeff Kaminski, made the biggest insider sale in the last 12 months. That single transaction was for US$4.6m worth of shares at a price of US$61.27 each. That means that an insider was selling shares at slightly below the current price (US$77.97). 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. We note that the biggest single sale was 67% of Jeff Kaminski's holding.

In the last year KB Home 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!

If you are like me, then you will not want to miss this free list of small cap stocks that are not only being bought by insiders but also have attractive valuations.

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. It's great to see that KB Home insiders own 3.7% of the company, worth about US$210m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

What Might The Insider Transactions At KB Home Tell Us?

An insider sold stock recently, but they haven't been buying. And there weren't any purchases to give us comfort, over the last year. But it is good to see that KB Home is growing earnings. It is good to see high insider ownership, but the insider selling leaves us cautious. 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. To assist with this, we've discovered 1 warning sign that you should run your eye over to get a better picture of KB Home.

Of course KB Home 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.