Insider Buying: The NexPoint Residential Trust, Inc. (NYSE:NXRT) Chairman Just Bought US$1.0m Worth Of Shares

Simply Wall St
·3 min read

Those following along with NexPoint Residential Trust, Inc. (NYSE:NXRT) will no doubt be intrigued by the recent purchase of shares by James Dondero, Chairman of the company, who spent a stonking US$1.0m on stock at an average price of US$59.01. There's no denying a buy of that magnitude suggests conviction in a brighter future, although we do note that proportionally it only increased their holding by 0.8%.

See our latest analysis for NexPoint Residential Trust

The Last 12 Months Of Insider Transactions At NexPoint Residential Trust

Notably, that recent purchase by James Dondero is the biggest insider purchase of NexPoint Residential Trust shares that we've seen in the last year. So it's clear an insider wanted to buy, at around the current price, which is US$60.86. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. If someone buys shares at well below current prices, it's a good sign on balance, but keep in mind they may no longer see value. Happily, the NexPoint Residential Trust insider decided to buy shares at close to current prices. James Dondero was the only individual insider to buy during the last year.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

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NexPoint Residential Trust is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

Insider Ownership of NexPoint Residential Trust

Many investors like to check how much of a company is owned by 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. It's great to see that NexPoint Residential Trust insiders own 11% of the company, worth about US$172m. This kind of significant ownership by insiders does generally increase the chance that the company is run in the interest of all shareholders.

So What Do The NexPoint Residential Trust Insider Transactions Indicate?

The recent insider purchase is heartening. And an analysis of the transactions over the last year also gives us confidence. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about NexPoint Residential Trust. One for the watchlist, at least! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To that end, you should learn about the 6 warning signs we've spotted with NexPoint Residential Trust (including 2 which are significant).

Of course NexPoint Residential Trust 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, but not derivative transactions.

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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.