As a relatively new agent, I have learned alot here on AR and have been thinking about ways to contribute to the community.  While I was getting my MBA, I became extremely interested in finance and have spent a lot of time studying investments, businesses, etc and I'd like to pass some of the knowledge gained onto others in hopes that it will be of some benefit. 

I was working on a blog about diversification, when I stumbled across some information related to D.R. Horton (nation's largest homebuilder <--according to their website) that I thought was interesting.  The CEO, CFO, and EVP all sold significant shares of stock this past week.  According to the SEC filings President and CEO Tomnitz exercised 310,341 options and promptly sold 200,600 shares of stock.  Considering that he has 1 million shares remaining, this is a very large percentage.  CFO Wheat sold 24,718 shares and has 19,839 remaining.  Admittedly, these numbers may be skewed as I did not do enough research to determine how many (if any) options that each member holds that are not currently counted as shares. 

There are 2 interesting financial concepts here.  First, buy low, sell high is a fundamental investment strategy.  Each of the leaders of this company exercised options for around $6 and sold the shares between $14-$16, so they made a decent profit.  But, why sell now?  This brings up the second concept, signalling.  Signalling says that the way a company (or it's leadership) conducts it business can indicate a lot about the direction that it is headed.  DR Horton (DHI) traded for $24.42 a year ago and $41.05 in July 2005.  By selling now, does it mean that DR Horton execs expect things to get much worse before they get better?  Do they see things getting better at all?  And prehaps most importantly, if they are dumping stock, why should you buy?

Baron Rothschild once said that the best time to buy is when there is "blood on the streets."  With a loss of 43% over the past 12 months, one might think that DR Horton was bleeding.  But the signal from the company is that there is more blood to be shed. 

Note:  The information above is my opinion only and not for investment purposes.  Please consult a professional when you are ready to buy or sell investments.