I don’t know if you’re a fan of the show “Love It or List It” but insiders and investors have to make this decision all of the time with their shares. Do you “love it” enough to hold the shares or do you “list it” by selling the shares. With the shares of Zillow Group (NASDAQ: Z) continuing to run to all-time highs over the past couple months, insiders have been listing their shares in a big way.
According to the Zillow Weekly Market Report, home sales are occurring at a blistering pace with pending home sales increasing 16.9% year-over-year. Homes are going under contract 11 days faster than the same period last year and despite increasing inventory it still isn’t outpacing demand.
As you consider current housing market conditions in the middle of a recession and a pandemic, it begs the question of whether or not the housing market is overheating. As you consider the insider trading for a company like Zillow, it may give you an indication.
Since July 1, there have been 38 sale transactions totaling 2.89 million shares and over $214.3 million in value. The breadth of selling has been across management with many insiders selling a significant amount of their holdings. One example is Stanley Humphries, Chief Analytics Officer, who sold 862,912 of his 922,251 shares.
Action to Take: The price recently gapped higher forming a spinning top on August 6. The gap occurred after a long upward trend in the price off the March low. The potential for the insider selling signaling a potential exhaustion gap is significant. While the stock isn’t a great short, a close below $73 on high volume could be the needed trigger with a $60 target.