Insiders Who Purchased US$2.98m Of NexPoint Diversified Real Estate Trust Stock May Not Have Expected 11% Tumble

Insiders who acquired US$2.98m worth of NexPoint Diversified Real Estate Trust's (NYSE:NXDT) stock at an average price of US$3.67 in the past 12 months may be dismayed by the recent 11% 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 US$2.59m, 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.

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The Last 12 Months Of Insider Transactions At NexPoint Diversified Real Estate Trust

Over the last year, we can see that the biggest insider purchase was by Executive Vice President Dustin Norris for US$1.3m worth of shares, at about US$3.85 per share. That means that an insider was happy to buy shares at above the current price of US$3.18. Their view may have changed since then, but at least it shows they felt optimistic at the time. To us, it's very important to consider the price insiders pay for shares. 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 NexPoint Diversified Real Estate Trust insiders bought shares during the last year, they didn't sell. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

See our latest analysis for NexPoint Diversified Real Estate Trust

NexPoint Diversified Real Estate Trust is not the only stock insiders are buying. So take a peek at this free list of under-the-radar companies with insider buying.

Does NexPoint Diversified Real Estate Trust 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. Insiders own 18% of NexPoint Diversified Real Estate Trust shares, worth about US$26m. 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 Does This Data Suggest About NexPoint Diversified Real Estate Trust Insiders?

There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. Insiders own shares in NexPoint Diversified Real Estate Trust and we see no evidence to suggest they are worried about the 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. At Simply Wall St, we've found that NexPoint Diversified Real Estate Trust has 3 warning signs (2 shouldn't be ignored!) that deserve your attention before going any further with your analysis.

Of course NexPoint Diversified Real Estate Trust 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.