Keep An Eye On Hovnanian Enterprises As Insider Stock Selling Hits US$24m

Last week, Hovnanian Enterprises, Inc.'s (NYSE:HOV) stock jumped 11%, but insiders who sold US$24m worth of stock in over the past year are likely to be in a better position. Selling at an average price of US$186, which is higher than the current price, may have been the best move for these insiders because their investment would have been worth less now than when they sold.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

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The Last 12 Months Of Insider Transactions At Hovnanian Enterprises

The President, Ara Hovnanian, made the biggest insider sale in the last 12 months. That single transaction was for US$4.6m worth of shares at a price of US$237 each. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is US$97.94. So it may not shed much light on insider confidence at current levels.

In the last year Hovnanian Enterprises insiders didn't buy any company stock. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

Check out our latest analysis for Hovnanian Enterprises

I will like Hovnanian Enterprises 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.

Insider Ownership

Many investors like to check how much of a company is owned by insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Hovnanian Enterprises insiders own 16% of the company, worth about US$89m. 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 Do The Hovnanian Enterprises Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Hovnanian Enterprises shares in the last quarter. Still, the insider transactions at Hovnanian Enterprises in the last 12 months are not very heartening. But we do like the fact that insiders own a fair chunk of the company. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Case in point: We've spotted 3 warning signs for Hovnanian Enterprises you should be aware of, and 2 of them make us uncomfortable.

But note: Hovnanian Enterprises may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE 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 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.