From what we can see, insiders were net buyers in Smith Douglas Homes Corp.'s (NYSE:SDHC ) during the past 12 months. That is, insiders acquired the stock in greater numbers than they sold it.

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.

We've discovered 2 warning signs about Smith Douglas Homes. View them for free.

Smith Douglas Homes Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Lead Independent Director Jeffrey Jackson bought US$256k worth of shares at a price of US$29.77 per share. So it's clear an insider wanted to buy, even at a higher price than the current share price (being US$19.60). It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. Jeffrey Jackson was the only individual insider to buy shares in the last twelve months.

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 Smith Douglas Homes

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From looking at our data, insiders own US$1.0m worth of Smith Douglas Homes stock, about 0.1% of the company. We prefer to see high levels of insider ownership.

So What Do The Smith Douglas Homes 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. We'd like to see bigger individual holdings. However, we don't see anything to make us think Smith Douglas Homes insiders are doubting the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. When we did our research, we found 2 warning signs for Smith Douglas Homes (1 is a bit unpleasant!) that we believe deserve your full attention.

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.

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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.