Insiders Who Purchased AU$1.63m Of DevEx Resources Stock May Not Have Expected 18% Tumble

Insiders who acquired AU$1.63m worth of DevEx Resources Limited's (ASX:DEV) stock at an average price of AU$0.34 in the past 12 months may be dismayed by the recent 18% price decline. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth AU$1.35m, which is not what they expected.

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.

Check out 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 Non-Executive Chairman Timothy Rupert Goyder for AU$750k worth of shares, at about AU$0.34 per share. That means that even when the share price was higher than AU$0.28 (the recent price), an insider wanted to purchase shares. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.

In the last twelve months DevEx Resources insiders were buying shares, but not selling. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

DevEx Resources is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insiders At DevEx Resources Have Bought Stock Recently

It's good to see that DevEx Resources insiders have made notable investments in the company's shares. We can see that Non-Executive Chairman Timothy Rupert Goyder paid AU$650k for shares in the company. No-one sold. This could be interpreted as suggesting a positive outlook.

Insider Ownership Of DevEx Resources

Many investors like to check how much of a company is owned by 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. DevEx Resources insiders own about AU$26m worth of shares. That equates to 23% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

What Might The Insider Transactions At DevEx Resources Tell Us?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. But we don't feel the same about the fact the company is making losses. When combined with notable insider ownership, these factors suggest DevEx Resources insiders are well aligned, and that they may think the share price is too low. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 5 warning signs for DevEx Resources you should be aware of, and 3 of them are significant.

Of course DevEx Resources may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

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.

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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.