Insiders At Forestar Group Sold US$680k In Stock, Alluding To Potential Weakness

Quite a few Forestar Group Inc. (NYSE:FOR) insiders sold their shares over the past year, which may be a cause for concern. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, if numerous insiders are selling, shareholders should investigate more.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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Forestar Group Insider Transactions Over The Last Year

In the last twelve months, the biggest single sale by an insider was when the Executive VP, James Allen, sold US$496k worth of shares at a price of US$26.08 per share. That means that an insider was selling shares at slightly below the current price (US$27.08). 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. This single sale was just 39% of James Allen's stake.

Over the last year we saw more insider selling of Forestar Group shares, than buying. 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 Forestar Group

I will like Forestar Group 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.

Forestar Group Insiders Are Selling The Stock

The last three months saw significant insider selling at Forestar Group. In total, Executive VP James Allen dumped US$496k 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.

Does Forestar Group Boast High 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. Insiders own 0.5% of Forestar Group shares, worth about US$6.9m, according to our data. Whilst better than nothing, we're not overly impressed by these holdings.

What Might The Insider Transactions At Forestar Group Tell Us?

An insider hasn't bought Forestar Group stock in the last three months, but there was some selling. Despite some insider buying, the longer term picture doesn't make us feel much more positive. When you consider that most companies have higher levels of insider ownership, we're a little wary. We'd certainly practice some caution before buying! 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. For instance, we've identified 3 warning signs for Forestar Group (2 are potentially serious) you should be aware of.

Of course Forestar Group 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.