Many Lennar Corporation (NYSE:LEN) insiders ditched their stock over the past year, which may be of interest to the company's shareholders. When analyzing insider transactions, it is usually more valuable to know whether insiders are buying versus knowing if they are selling, as the latter sends an ambiguous message. However, if numerous insiders are selling, shareholders should investigate more.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

The Last 12 Months Of Insider Transactions At Lennar

Over the last year, we can see that the biggest insider sale was by the VP, General Counsel & Secretary, Mark Sustana, for US$5.5m worth of shares, at about US$146 per share. That means that an insider was selling shares at below the current price (US$149). As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. It is worth noting that this sale was 67% of Mark Sustana's holding.

Over the last year we saw more insider selling of Lennar shares, than buying. The sellers received a price of around US$143, on average. It's not particularly great to see insiders were selling shares at below recent prices. Of course, the sales could be motivated for a multitude of reasons, so we shouldn't jump to conclusions. 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!

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Lennar Insiders Are Selling The Stock

Over the last three months, we've seen notably more insider selling, than insider buying, at Lennar. In that time, VP, General Counsel & Secretary Mark Sustana dumped US$1.5m worth of shares. On the flip side, Independent Director Amy Banse spent US$247k on purchasing shares. Because the selling vastly outweighs the buying, we'd say this is a somewhat bearish sign.

Does Lennar Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Lennar insiders own 11% of the company, currently worth about US$4.6b based on the recent share price. 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 Do The Lennar Insider Transactions Indicate?

Unfortunately, there has been more insider selling of Lennar stock, than buying, in the last three months. And our longer term analysis of insider transactions didn't bring confidence, either. But since Lennar is profitable and growing, we're not too worried by this. It is good to see high insider ownership, but the insider selling leaves us cautious. 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. Every company has risks, and we've spotted 1 warning sign for Lennar you should know about.

But note: Lennar 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com