Don't Ignore The Insider Selling In Toll Brothers

Some Toll Brothers, Inc. (NYSE:TOL) shareholders may be a little concerned to see that the Chairman & CEO, Douglas Yearley, recently sold a substantial US$3.5m worth of stock at a price of US$138 per share. However, that sale only accounted for 6.4% of their holding, so arguably it doesn't say much about their conviction.

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The Last 12 Months Of Insider Transactions At Toll Brothers

Notably, that recent sale by Chairman & CEO Douglas Yearley was not the only time they sold Toll Brothers shares this year. Earlier in the year, they fetched US$155 per share in a -US$7.7m sale. That means that an insider was selling shares at around the current price of US$147. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. Given that the sale took place at around current prices, it makes us a little cautious but is hardly a major concern.

Insiders in Toll Brothers 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 want to know exactly who sold, for how much, and when, simply click on the graph below!

Check out our latest analysis for Toll Brothers

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).

Does Toll Brothers Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. It appears that Toll Brothers insiders own 0.6% of the company, worth about US$88m. 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 Do The Toll Brothers Insider Transactions Indicate?

Insiders sold Toll Brothers shares recently, but they didn't buy any. Looking to the last twelve months, our data doesn't show any insider buying. While insiders do own shares, they don't own a heap, and they have been selling. We're in no rush to buy! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. While conducting our analysis, we found that Toll Brothers has 1 warning sign and it would be unwise to ignore it.

Of course Toll Brothers 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.