It is not uncommon to see companies perform well in the years after insiders buy shares. Unfortunately, there are also plenty of examples of share prices declining precipitously after insiders have sold shares. So before you buy or sell DevEx Resources Limited (ASX:DEV), you may well want to know whether insiders have been buying or selling.

Do Insider Transactions Matter?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.

Insider transactions are not the most important thing when it comes to long-term investing. But equally, we would consider it foolish to ignore insider transactions altogether. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

View our latest analysis for DevEx Resources

The Last 12 Months Of Insider Transactions At DevEx Resources

The Non-Executive Chairman Timothy Rupert Goyder made the biggest insider purchase in the last 12 months. That single transaction was for AU$1.6m worth of shares at a price of AU$0.05 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.23. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

Over the last year, we can see that insiders have bought 36.27m shares worth AU$1.9m. But they sold 31.41m shares for AU$1.6m. Overall, DevEx Resources insiders were net buyers during the last year. 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!

DevEx Resources is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Does DevEx Resources 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. A high insider ownership often makes company leadership more mindful of shareholder interests. It appears that DevEx Resources insiders own 26% of the company, worth about AU$16m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The DevEx Resources Insider Transactions Indicate?

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. Overall we don't see anything to make us think DevEx Resources insiders are doubting the company, and they do own shares. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing DevEx Resources. When we did our research, we found 4 warning signs for DevEx Resources (1 shouldn't be ignored!) that we believe deserve your full attention.

Of course DevEx Resources 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, but not derivative transactions.

This article by Simply Wall St is general in nature. 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.

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