We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we’ll take a look at whether insiders have been buying or selling shares in M/I Homes, Inc. (NYSE:MHO).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock on the market. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
M/I Homes Insider Transactions Over The Last Year
Executive VP J. Mason 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$27.01 each. So what is clear is that an insider saw fit to sell at around the current price of US$26.59. They might be selling for a variety of reasons, but it’s hard to argue this is a bullish sign. Arguably, insider selling at around current prices should give us reason to reflect on whether the stock is fully valued at the moment.
Over the last year, we note insiders sold 170.76k shares worth US$4.6m. In total, M/I Homes insiders sold more than they bought over the last year. The average sell price was around US$27.10. It’s not particularly great to see insiders were selling shares around current prices. But we don’t put too much weight on the insider selling, since sellers could have personal reasons. The chart below shows insider transactions (by 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!
I will like M/I Homes better if I see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Insiders at M/I Homes Have Sold Stock Recently
The last three months saw significant insider selling at M/I Homes. In total, insiders sold US$3.5m worth of shares in that time, and we didn’t record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.
Does M/I Homes Boast High Insider Ownership?
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. It appears that M/I Homes insiders own 2.2% of the company, worth about US$16m. 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 Does This Data Suggest About M/I Homes Insiders?
Insiders sold M/I Homes shares recently, but they didn’t buy any. And even if we look to the last year, we didn’t see any purchases. But it is good to see that M/I Homes is growing earnings. Insiders own shares, but we’re still pretty cautious, given the history of sales. We’d think twice before buying! If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.
Of course M/I Homes may not be the best stock to buy. So you may wish to see this free collection of high quality companies.
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If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.