Possible Bearish Signals With M/I Homes Insiders Disposing Stock

Many M/I Homes, Inc. (NYSE:MHO) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. When evaluating insider transactions, knowing whether insiders are buying is usually more beneficial than knowing whether they are selling, as the latter can be open to many interpretations. 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.

See our latest analysis for M/I Homes

M/I Homes Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the Chairman, Robert Schottenstein, for US$4.1m worth of shares, at about US$160 per share. So we know that an insider sold shares at around the present share price of US$157. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.

Insiders in M/I Homes didn't buy any shares in the last year. 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!

I will like M/I Homes better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

M/I Homes Insiders Are Selling The Stock

Over the last three months, we've seen significant insider selling at M/I Homes. Specifically, Chairman Robert Schottenstein ditched US$5.3m worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership Of M/I Homes

For a common shareholder, it is worth checking how many shares are held by company 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. M/I Homes insiders own about US$96m worth of shares. That equates to 2.2% 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.

So What Do The M/I Homes Insider Transactions Indicate?

An insider sold M/I Homes shares recently, but they didn't buy any. And even if we look at the last year, we didn't see any purchases. On the plus side, M/I Homes makes money, and is growing profits. While insiders do own shares, they don't own a heap, and they have been selling. We'd practice some caution before buying! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 1 warning sign for M/I Homes you should be aware of.

But note: M/I Homes may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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.

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