Some NVR, Inc. (NYSE:NVR) shareholders may be a little concerned to see that the Independent Director, Alfred Festa, recently sold a substantial US$2.1m worth of stock at a price of US$4,129 per share. That diminished their holding by a very significant 61%, which arguably implies a strong desire to reallocate capital.
The Last 12 Months Of Insider Transactions At NVR
In fact, the recent sale by Alfred Festa was the biggest sale of NVR shares made by an insider individual in the last twelve months, according to our records. That means that an insider was selling shares at slightly below the current price (US$4,248). When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was 61% of Alfred Festa's holding.
In the last twelve months insiders purchased 152.00 shares for US$502k. On the other hand they divested 627.00 shares, for US$2.6m. In total, NVR insiders sold more than they bought over the last year. The average sell price was around US$4,071. It's not particularly great to see insiders were selling shares at below recent prices. But we wouldn't put too much weight on the insider selling. 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 NVR better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insider Ownership of NVR
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. NVR insiders own about US$421m worth of shares (which is 2.7% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.
So What Do The NVR Insider Transactions Indicate?
The stark truth for NVR is that there has been more insider selling than insider buying in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. The company boasts high insider ownership, but we're a little hesitant, given the history of share sales. 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 - NVR has 2 warning signs we think you should be aware of.
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, but not derivative transactions.
If you decide to trade NVR, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account.
This article by Simply Wall St is general in nature. 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email email@example.com.