We wouldn't blame Dream Finders Homes, Inc. (NYSE:DFH) shareholders if they were a little worried about the fact that Patrick Zalupski, the Founder recently netted about US$5.4m selling shares at an average price of US$31.25. That's a big disposal, and it decreased their holding size by 25%, which is notable but not too bad.
The Last 12 Months Of Insider Transactions At Dream Finders Homes
Notably, that recent sale by Patrick Zalupski is the biggest insider sale of Dream Finders Homes shares that we've seen in the last year. So it's clear an insider wanted to take some cash off the table, even below the current price of US$33.34. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 25% of Patrick Zalupski's holding.
Insiders in Dream Finders Homes didn't buy any shares in the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.
Insider Ownership
For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Dream Finders Homes insiders own 71% of the company, currently worth about US$2.2b based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
So What Does This Data Suggest About Dream Finders Homes Insiders?
Insiders haven't bought Dream Finders Homes stock in the last three months, but there was some selling. And even if we look at the last year, we didn't see any purchases. But since Dream Finders Homes is profitable and growing, we're not too worried by this. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn't make us feel confident about the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 3 warning signs for Dream Finders Homes (2 are a bit concerning!) that we believe deserve your full attention.
Of course Dream Finders Homes 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.
