Byron Boston, CEO and Co-CIO of Dynex Capital (DX) recently bought 12,600 shares. The buy increased his holdings by 3.5 percent, and came to a total price of just over $201,000.
This is the first insider activity at the company in nearly one year. Insiders have mostly been buyers of shares over the past three years, but this most recent one is the largest insider activity in over two years.
Overall, company insiders own nearly 3.5 percent of the outstanding shares.
Shares of the mortgage REIT company have declined about 12 percent in the past year. Revenue and earnings are also down, as mortgage refinancings over the past year have lowered costs for borrowers at the expense of lenders. Even with that drop, the company posts and impressive 80 percent profit margin.
Action to take: Mortgage REITs can be a solid business, but tend to underperform on fear of rising interest rates. Shares are likely undervalued a bit here, trading at under 10 times forward earnings. Investors can also get a large 9.6 percent dividend here, although the dividend is unlikely to see further growth from here.
Traders can bet on a likely move higher in the coming weeks on a market rebound with a trade like the June $15 calls. Already about $1.50 in-the-money, the calls can leverage a move higher and are inexpensively priced at about $1.75.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.