It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in NVR, Inc. (NYSE:NVR).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.
The Last 12 Months Of Insider Transactions At NVR
The Independent Lead Director, David Preiser, made the biggest insider sale in the last 12 months. That single transaction was for US$1.7m worth of shares at a price of US$3,311 each. That means that even when the share price was below the current price of US$3,622, an insider wanted to cash in some shares. 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. Please do note, however, that sellers may have a variety of reasons for selling, so we don't know for sure what they think of the stock price. It is worth noting that this sale was 69% of David Preiser's holding. The only individual insider seller over the last year was David Preiser.
In the last twelve months insiders purchased 205 shares for US$569k. But insiders sold 1164 shares worth US$3.8m. David Preiser divested 1164 shares over the last 12 months at an average price of US$3,256. You can see a visual depiction of insider transactions (by individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
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.
Does NVR Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. NVR insiders own about US$421m worth of shares (which is 3.1% 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 Does This Data Suggest About NVR Insiders?
The fact that there have been no NVR insider transactions recently certainly doesn't bother us. It's heartening that insiders own plenty of stock, but we'd like to see more insider buying, since the last year of NVR insider transactions don't fill us with confidence. Of course, the future is what matters most. So if you are interested in NVR, you should check out this free report on analyst forecasts for the company.
Of course NVR 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, but not derivative transactions.
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