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Forestar Group Inc. (NYSE:FOR) insiders who purchased shares in the last 12 months were richly rewarded last week. The stock climbed by 9.9% resulting in a US$96m addition to the company’s market value. Put another way, the original US$118k acquisition is now worth US$125k.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
The Last 12 Months Of Insider Transactions At Forestar Group
Over the last year, we can see that the biggest insider purchase was by CFO, Treasurer & Principal Accounting Officer James Allen for US$74k worth of shares, at about US$20.77 per share. So it's clear an insider wanted to buy, at around the current price, which is US$21.51. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. The good news for Forestar Group share holders is that insiders were buying at near the current price.
Over the last year, we can see that insiders have bought 5.80k shares worth US$118k. But insiders sold 2.00k shares worth US$42k. Overall, Forestar Group insiders were net buyers during the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. We usually like to see fairly high levels of insider ownership. Based on our data, Forestar Group insiders have about 0.3% of the stock, worth approximately US$3.1m. We consider this fairly low insider ownership.
So What Do The Forestar Group Insider Transactions Indicate?
There haven't been any insider transactions in the last three months -- that doesn't mean much. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it'd be more encouraging if Forestar Group insiders bought more shares in 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. For example, Forestar Group has 3 warning signs (and 2 which shouldn't be ignored) we think you should know about.
If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt.
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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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.