Insiders who purchased DiamondHead Holdings Corp. (NASDAQ:DHHC) shares in the past 12 months are unlikely to be deeply impacted by the stock's 33% decline over the past week. Reason being, despite the recent loss, insiders original purchase value of US$13m is now worth US$16m.
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.
See our latest analysis for DiamondHead Holdings
The Last 12 Months Of Insider Transactions At DiamondHead Holdings
The Chairman & Co-CEO David Hamamoto made the biggest insider purchase in the last 12 months. That single transaction was for US$10m worth of shares at a price of US$10.09 each. We do like to see buying, but this purchase was made at well below the current price of US$12.68. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.
David Hamamoto purchased 1.25m shares over the year. The average price per share was US$10.09. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!
DiamondHead Holdings is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.
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. DiamondHead Holdings insiders own about US$125m worth of shares (which is 76% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At DiamondHead Holdings Tell Us?
It's certainly positive to see the recent insider purchase. And the longer term insider transactions also give us confidence. When combined with notable insider ownership, these factors suggest DiamondHead Holdings insiders are well aligned, and quite possibly think the share price is too low. That's what I like to see! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. In terms of investment risks, we've identified 4 warning signs with DiamondHead Holdings and understanding them should be part of your investment process.