De.mem Insiders Up AU$683k On AU$1.21m Investment

Insiders who bought De.mem Limited (ASX:DEM) in the last 12 months may probably not pay attention to the stock's recent 13% drop. Even after accounting for the recent loss, the AU$1.21m worth of stock purchased by them is now worth AU$1.89m or in other words, their investment continues to give good returns.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

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The Last 12 Months Of Insider Transactions At De.mem

The Non-Executive Chairman Andreas de Wit made the biggest insider purchase in the last 12 months. That single transaction was for AU$275k worth of shares at a price of AU$0.055 each. We do like to see buying, but this purchase was made at well below the current price of AU$0.10. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

De.mem insiders may have bought shares in the last year, but they didn't sell any. Their average price was about AU$0.067. We don't deny that it is nice to see insiders buying stock in the company. But we must note that the investments were made at well below today's share price. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!

View our latest analysis for De.mem

There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).

De.mem Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at De.mem. Specifically, Non-Executive Chairman Andreas de Wit bought AU$118k worth of shares in that time, and we didn't record any sales whatsoever. This makes one think the business has some good points.

Does De.mem Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company 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 17% of De.mem shares, worth about AU$5.7m. 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 De.mem Insiders?

It's certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. When combined with notable insider ownership, these factors suggest De.mem insiders are well aligned, and that they may think the share price is too low. 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 found 1 warning sign for De.mem that deserve your attention before buying any shares.

Of course De.mem 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.