Insiders sitting comfortably on a US$3.2m profit after buying DiamondHead Holdings Corp. (NASDAQ:DHHC) stock worth US$13m last year

DiamondHead Holdings Corp. (NASDAQ:DHHC) insiders who acquired shares over the previous 12 months, can probably afford to ignore the recent 33% decline in the stock price. Even after accounting for the recent loss, the US$13m worth of stock purchased by them is now worth US$16m or in other words, their investment continues to give good returns.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for DiamondHead Holdings

DiamondHead Holdings Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Chairman & Co-CEO David Hamamoto bought US$10m worth of shares at a price of US$10.09 per share. Even though the purchase was made at a significantly lower price than the recent price (US$12.68), we still think insider buying is a positive. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

David Hamamoto purchased 1.25m shares over the year. The average price per share was US$10.09. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Does DiamondHead Holdings Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. 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's great to see that DiamondHead Holdings insiders own 76% of the company, worth about US$125m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The DiamondHead Holdings Insider Transactions Indicate?

It's certainly positive to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. Once you factor in the high insider ownership, it certainly seems like insiders are positive about DiamondHead Holdings. That's what I like to see! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing DiamondHead Holdings. In terms of investment risks, we've identified 4 warning signs with DiamondHead Holdings and understanding these should be part of your investment process.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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, 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.