It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So shareholders might well want to know whether insiders have been buying or selling shares in Dynex Capital, Inc. (NYSE:DX).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.
View our latest analysis for Dynex Capital
The Last 12 Months Of Insider Transactions At Dynex Capital
Over the last year, we can see that the biggest insider purchase was by Independent Director Barry Igdaloff for US$1.2m worth of shares, at about US$11.64 per share. That implies that an insider found the current price of US$14.08 per share to be enticing. Of course they may have changed their mind. But this suggests they are optimistic. While we always like to see insider buying, it's less meaningful if the purchases were made at much lower prices, as the opportunity they saw may have passed. The good news for Dynex Capital share holders is that insiders were buying at near the current price.
Dynex Capital insiders may have bought shares in the last year, but they didn't sell any. The chart below shows insider transactions (by individuals) over the last year. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
Dynex Capital is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Dynex Capital Insiders Bought Stock Recently
Over the last three months, we've seen significant insider buying at Dynex Capital. Overall, six insiders shelled out US$1.5m for shares in the company -- and none sold. That shows some optimism about the company's future.
Does Dynex Capital Boast High Insider Ownership?
Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that Dynex Capital insiders own 5.3% of the company, worth about US$17m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
So What Do The Dynex Capital Insider Transactions Indicate?
It's certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Insiders likely see value in Dynex Capital shares, given these transactions (along with notable insider ownership of the company). So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 4 warning signs for Dynex Capital (1 is a bit unpleasant!) that we believe deserve your full attention.
But note: Dynex Capital 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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