Thursday, February 07, 2008

Insider Buying that Homebuilders

What do homebuilding executives know that we don't? Apparently, they know when to buy and sell their own stock. The WSJ Marketbeat blog has an entry about recent insider activity at the major homebuilders:

Three major home builders, KB Home, Lennar, Standard Pacific and Hovnanian all have insider score rankings above 75 for the last month, suggesting positive sentiment among insiders at those companies in the last few months.

Two of the three (LEN and HOV) currently rank in InsiderScore’s top 100 companies in terms of positive buying interest, which means insider buying has spiked in the last month. Hovnanian is ranked highest, with notable purchases in January from Kevork Hovnanian, chairman, and Joseph Marengi, a director at the company. Notably, insider sentiment went negative in the first quarter of 2007, when CEO Ara Hovnanian sold off shares.

Apparently they know when to buy; the insiders at HOV are up about 80% on their investment in less than a month. There was a lot of insider selling in the homebuilders near the top as well so these guys are pretty good at timing their purchases and sales. Maybe we are near a bottom in the homebuilding industry.

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