It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in DevEx Resources Limited’s (ASX:DEV) case, it’s fantastic news for shareholders.
Although we don’t think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.
The Last 12 Months Of Insider Transactions At DevEx Resources
Over the last year, we can see that the biggest insider purchase was by Non-Executive Chairman Timothy Rupert Goyder for AU$472k worth of shares, at about AU$0.47 per share. That means that even when the share price was higher than AU$0.35 (the recent price), an insider wanted to purchase shares. It’s very possible they regret the purchase, but it’s more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.
While DevEx Resources insiders bought shares during the last year, they didn’t sell. 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!
DevEx Resources is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. DevEx Resources insiders own about AU$30m worth of shares. That equates to 23% of the company. While this is a strong but not outstanding level of insider ownership, it’s enough to indicate some alignment between management and smaller shareholders.
So What Does This Data Suggest About DevEx Resources Insiders?
It doesn’t really mean much that no insider has traded DevEx Resources shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Overall we don’t see anything to make us think DevEx Resources insiders are doubting the company, and they do own shares. While we like knowing what’s going on with the insider’s ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. Case in point: We’ve spotted 5 warning signs for DevEx Resources you should be aware of, and 3 of these shouldn’t be ignored.
But note: DevEx Resources 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, but not derivative transactions.
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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.
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