The recent price decline of 10% in DigitalX Limited's (ASX:DCC) stock may have disappointed insiders who bought AU$260.0k worth of shares at an average price of AU$0.031 in the past 12 months. Insiders purchase with the hope of seeing their investments increase in value over time. However, due to recent losses, their initial investment is now only worth AU$217.6k, which is not great.
Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.
DigitalX Insider Transactions Over The Last Year
The insider Antanas Guoga made the biggest insider purchase in the last 12 months. That single transaction was for AU$164k worth of shares at a price of AU$0.033 each. That means that even when the share price was higher than AU$0.026 (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. To us, it's very important to consider the price insiders pay for shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.
While DigitalX 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 DigitalX
There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.
Insiders At DigitalX Have Bought Stock Recently
It's good to see that DigitalX insiders have made notable investments in the company's shares. insider Antanas Guoga spent AU$164k on stock, and there wasn't any selling. This makes one think the business has some good points.
Does DigitalX Boast High Insider Ownership?
Many investors like to check how much of a company is owned by insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. DigitalX insiders own about AU$11m worth of shares. That equates to 32% 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 DigitalX Tell Us?
It's certainly positive to see the recent insider purchase. 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 DigitalX we think they are probably pretty confident of a bright future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example, DigitalX has 3 warning signs (and 1 which is a bit concerning) we think you should know about.
But note: DigitalX 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.
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