Insiders who purchased US$737k worth of Dynex Capital, Inc. (NYSE:DX) shares over the past year recouped some of their losses after price gained 9.0% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled US$7.3k since the time of purchase.
While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.
See 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 CEO, Co-Chief Investment Officer & Director Byron Boston for US$201k worth of shares, at about US$15.98 per share. So it’s clear an insider wanted to buy, even at a higher price than the current share price (being US$14.28). 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. 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.
Dynex Capital insiders may have bought shares in the last year, but they didn’t sell any. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
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).
Dynex Capital Insiders Bought Stock Recently
It’s good to see that Dynex Capital insiders have made notable investments in the company’s shares. CEO, Co-Chief Investment Officer & Director Byron Boston spent US$160k on stock, and there wasn’t any selling. This is a positive in our book as it implies some confidence.
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. We usually like to see fairly high levels of insider ownership. It appears that Dynex Capital insiders own 1.8% of the company, worth about US$12m. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.
What Might The Insider Transactions At Dynex Capital Tell Us?
It is good to see the recent insider purchase. We also take confidence from the longer term picture of insider transactions. Given that insiders also own a fair bit of Dynex Capital we think they are probably pretty confident of a bright future. In addition to knowing about insider transactions going on, it’s beneficial to identify the risks facing Dynex Capital. To that end, you should learn about the 4 warning signs we’ve spotted with Dynex Capital (including 2 which shouldn’t be ignored).
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.
What are the risks and opportunities for Dynex Capital?
Dynex Capital, Inc., a mortgage real estate investment trust, invests in mortgage-backed securities (MBS) on a leveraged basis in the United States.
Rewards
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Trading at 32.2% below our estimate of its fair value
Risks
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Earnings are forecast to decline by an average of 49.6% per year for the next 3 years
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Debt is not well covered by operating cash flow
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Shareholders have been diluted in the past year
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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.
