DigitalX Insiders AU$2.7m Short Of Breakeven On Stock Purchase

Insiders who purchased AU$8.40m worth of DigitalX Limited (ASX:DCC) shares over the past year recouped some of their losses after price gained 11% last week. However, the purchase is proving to be an expensive wager as insiders are yet to get ahead of their losses which currently stand at AU$2.7m since the time of purchase.

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 DigitalX

In the last twelve months, the biggest single purchase by an insider was when insider Antanas Guoga bought AU$3.3m worth of shares at a price of AU$0.078 per share. That means that an insider was happy to buy shares at above the current price of AU$0.042. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. 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. Notably Antanas Guoga was also the biggest seller.

Over the last year, we can see that insiders have bought 136.72m shares worth AU$8.4m. But insiders sold 41.91m shares worth AU$3.1m. Overall, DigitalX insiders were net buyers during the last year. The average buy price was around AU$0.061. These transactions suggest that insiders have considered the current price attractive. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. 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

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

Insider Ownership Of DigitalX

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. Insiders own 29% of DigitalX shares, worth about AU$18m. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Do The DigitalX Insider Transactions Indicate?

It doesn't really mean much that no insider has traded DigitalX shares in the last quarter. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in DigitalX and we see no evidence to suggest they are worried about the 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. Case in point: We've spotted 4 warning signs for DigitalX you should be aware of, and 2 of them make us uncomfortable.

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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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.