Stock Analysis

DevEx Resources Up 12%, Insider Buyers Are Up 29%

ASX:DEV
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DevEx Resources Limited (ASX:DEV) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 12%, resulting in a AU$18m rise in the company's market capitalisation, translating to a gain of 29% on their initial investment. In other words, the original AU$6.28m purchase is now worth AU$8.07m.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for DevEx Resources

The Last 12 Months Of Insider Transactions At DevEx Resources

Over the last year, we can see that the biggest insider purchase was by insider Graham Kluck for AU$2.2m worth of shares, at about AU$0.33 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.39. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

In the last twelve months DevEx Resources insiders were buying shares, but not selling. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

insider-trading-volume
ASX:DEV Insider Trading Volume May 22nd 2024

DevEx Resources is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders At DevEx Resources Have Bought Stock Recently

Over the last quarter, DevEx Resources insiders have spent a meaningful amount on shares. In total, insiders bought AU$3.4m worth of shares in that time, and we didn't record any sales whatsoever. That shows some optimism about the company's future.

Does DevEx Resources Boast High Insider Ownership?

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that DevEx Resources insiders own 29% of the company, worth about AU$50m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The DevEx Resources Insider Transactions Indicate?

The recent insider purchases are heartening. And an analysis of the transactions over the last year also gives us confidence. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Given that insiders also own a fair bit of DevEx Resources we think they are probably pretty confident of a bright future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Our analysis shows 3 warning signs for DevEx Resources (2 are a bit concerning!) and we strongly recommend you look at them before investing.

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 of direct interests only, but not derivative transactions or indirect interests.

Valuation is complex, but we're helping make it simple.

Find out whether DevEx Resources is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.