W
hen multiple insiders buy shares in a company, as seen with NexPoint Diversified Real Estate Trust's (NYSE:NXDT), it sends a positive signal to shareholders. While insider transactions shouldn't be the sole basis for investment decisions, they can provide valuable insights into a company's prospects.

    In the past year, Chairman & President James Dondero made the largest single purchase of US$313k worth of shares at around the current price of US$5.42 per share. This suggests he is optimistic about the company's future. Insiders bought shares during this period without selling any, which is a positive sign.

    NexPoint Diversified Real Estate Trust insiders own 14% of the company's shares, worth approximately US$32m. While this level of insider ownership is good but not exceptional, it indicates a reasonable degree of alignment between leaders and other shareholders.

    These insider transactions can help build a thesis about the stock, but it's essential to consider the risks facing the company as well. For instance, NexPoint Diversified Real Estate Trust has 4 warning signs (and 3 potentially serious) that investors should be aware of.