Investors who take an interest in Smith Douglas Homes Corp. (NYSE:SDHC) should definitely note that the Lead Independent Director, Jeffrey Jackson, recently paid US$29.77 per share to buy US$256k worth of the stock. We reckon that's a good sign, especially since the purchase boosted their holding by 120%.

See our latest analysis for Smith Douglas Homes

Smith Douglas Homes Insider Transactions Over The Last Year

Notably, that recent purchase by Jeffrey Jackson is the biggest insider purchase of Smith Douglas Homes shares that we've seen in the last year. Even though the purchase was made at a significantly lower price than the recent price (US$33.59), we still think insider buying is a positive. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

In the last twelve months Smith Douglas Homes insiders were buying shares, but not selling. Their average price was about US$26.55. It is certainly positive to see that insiders have invested their own money in the company. However, we do note that they were buying at significantly lower prices than today's share price. 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!

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).

Insider Ownership Of Smith Douglas Homes

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Our data isn't picking up on much insider ownership at Smith Douglas Homes, though insiders do hold about US$158k worth of shares. This level of insider ownership is notably low, and not very encouraging.

What Might The Insider Transactions At Smith Douglas Homes Tell Us?

The recent insider purchase is heartening. And the longer term insider transactions also give us confidence. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Smith Douglas Homes insiders are expecting a bright 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. You'd be interested to know, that we found 1 warning sign for Smith Douglas Homes and we suggest you have a look.

Of course Smith Douglas Homes 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.