Form 4: Dream Finders CEO Sells Class A Stock, Details Forward Contract

Dream Finders Homes, Inc. CEO Patrick O. Zalupski reported sales of Class A common stock and disclosed details of a prepaid variable forward sale contract involving 3 million Class B shares.

Summary

• Patrick O. Zalupski, President and CEO, Director, and 10% Owner of Dream Finders Homes, Inc. (DFH), reported transactions on October 1 and October 2, 2025.
• On October 1, 2025, Mr. Zalupski sold 7,443 shares of Class A common stock at a weighted average price of $26.04 per share, with prices ranging from $25.70 to $26.42.
• Following this transaction, Mr. Zalupski beneficially owned 1,898,466 shares of Class A common stock, including 6,141 shares held in a 401(k) account.
• On October 2, 2025, Mr. Zalupski sold an additional 6,794 shares of Class A common stock at a weighted average price of $25.93 per share, with prices ranging from $25.49 to $26.19.
• After the second sale, his direct beneficial ownership of Class A common stock was 1,891,672 shares.
• These sales were made pursuant to a Rule 10b5-1(c) contract, instruction, or written plan.
• Mr. Zalupski also holds 56,320,586 shares of Class B common stock directly, 809,409 shares indirectly through a trust for his children, and 596,158 shares indirectly through POZ Holdings, Inc.
• Each Class B common stock share is convertible into one Class A common stock share and has no expiration date.
• Mr. Zalupski entered into prepaid variable forward sale contracts on August 14, 2024, December 5, 2024, and June 5, 2025, pledging an aggregate of 3,000,000 shares of Class B common stock to secure obligations.
• He retains dividend and voting rights in the pledged shares during the term of the pledge.
• The contracts obligate Mr. Zalupski to deliver up to 100% of the pledged shares or an equivalent cash amount on settlement dates, determined by the Class A common stock's volume-weighted average price relative to specified Floor and Cap Prices.

Sentiment

Score: 4

Explanation: The sentiment is slightly negative due to insider selling, even though it's under a 10b5-1 plan. While planned sales are less alarming than unplanned ones, they still represent a reduction in direct insider holdings. The forward contract adds complexity but is a pre-arranged financial instrument rather than a direct vote of confidence/no confidence.

Positives

• The reported stock sales were conducted under a Rule 10b5-1(c) plan, indicating they were pre-scheduled and not based on immediate inside information, which enhances transparency and compliance.
• Mr. Zalupski retains significant beneficial ownership in Dream Finders Homes, Inc., including over 56 million Class B shares directly and 3 million Class B shares pledged under forward contracts where he retains voting and dividend rights.

Negatives

• The sale of 14,237 shares of Class A common stock by a key insider (CEO, Director, 10% Owner) could be perceived negatively by the market, potentially signaling a lack of confidence or a need for personal liquidity.
• The existence of a prepaid variable forward sale contract, while a common financial instrument, introduces complexity and future obligations for the CEO based on the company's stock performance.

Risks

• The prepaid variable forward sale contracts expose Mr. Zalupski to market risk, as the number of shares or cash he must deliver on settlement dates (ranging from August 2027 to April 2029) depends on the future volume-weighted average price of Class A common stock relative to specified Floor and Cap Prices.
• A significant decline in the Class A common stock price below the Floor Price ($22.12, $24.01, or $17.27 depending on the component) would obligate Mr. Zalupski to deliver all 1,000,000 pledged shares for that component, potentially increasing his exposure to the stock's performance.

Future Outlook

The filing indicates future obligations for Mr. Zalupski related to the prepaid variable forward sale contracts, with settlement dates for the 3,000,000 pledged Class B shares occurring in August 2027, May 2028, and March/April 2029. The number of shares or cash to be delivered will depend on the Class A common stock's price performance relative to predefined floor and cap prices at those future valuation dates.

Related Party Transactions

• Indirect beneficial ownership of 809,409 Class B common stock shares held by a trust established for the benefit of the reporting person's children.
• Indirect beneficial ownership of 596,158 Class B common stock shares held by POZ Holdings, Inc., which is controlled by the reporting person.

Stakeholder Impact

• Shareholders may view the insider selling, even if pre-planned, as a signal regarding management's perspective on future stock performance or as a personal liquidity event.
• The existence of the prepaid variable forward sale contract could introduce a perception of future selling pressure or a complex financial arrangement tied to the CEO's holdings.

Next Steps

• Settlement of the first component of the prepaid variable forward sale contract between August 16, 2027, and August 27, 2027, for 1,000,000 shares.
• Settlement of the second component of the prepaid variable forward sale contract between May 15, 2028, and May 26, 2028, for 1,000,000 shares.
• Settlement of the third component of the prepaid variable forward sale contract between March 20, 2029, and April 3, 2029, for 1,000,000 shares.

Key Dates

Recommendation

While the insider sales are pre-planned under a 10b5-1 program, which mitigates the negative signal of an unplanned sale, they still represent a reduction in direct insider ownership. The filing does not provide new fundamental information about the company's operations or financial performance that would warrant a change in investment thesis. The forward contract is a complex financial instrument that ties a significant portion of the CEO's Class B holdings to future stock performance, but its immediate impact on the company's valuation is neutral. Therefore, a 'hold' recommendation is appropriate, advising investors to maintain their current position while monitoring future company performance and any further insider activity.

Keywords

Dream Finders Homes, DFH, Insider Transaction, Form 4, Stock Sale, CEO, Director, 10b5-1 Plan, Class A Common Stock, Class B Common Stock, Prepaid Variable Forward Sale Contract, Beneficial Ownership