DMLP

Dorchester Minerals ($DMLP) CEO's Consecutive Purchases vs. $25 Stock Price: Balancing Performance Decline and Management Confidence

12/02/2025 22:15

Dorchester Minerals LP ($DMLP), headquartered in Dallas, Texas, is an energy mineral rights company that primarily owns mineral rights and royalty interests in oil and natural gas producing regions. Established in 1982, the company holds mineral rights across more than 600 counties, including major U.S. shale regions, operating a business model that generates royalty income from producers. Over the past 18 months, $DMLP's stock movement has reflected the volatility typical of the energy sector. Starting at around $29 in June 2024, shares surged to $33 following the election in November, but have since declined consistently, currently trading near $25—a decline of approximately 24% from recent highs. Amid this stock weakness, what stands out is the consistent buying behavior of management and board members. CEO Bradley Ehrman has purchased company shares seven times over the past two years, notably adding $3.48 million worth over two consecutive days on November 25-26. His purchase prices of $21.26-21.60 per share closely align with current trading levels. CFO Leslie Moriyama also added $65,000 during the same period, joined by directors Frank Box and Robert Vaughn. More noteworthy is that their buying pattern runs counter to the stock's decline. Even when shares traded above $30 in December 2024, the CEO and CFO made substantial purchases, and the CEO added more in March at $29. The recent consecutive purchases in the $21-25 range suggest management views these levels as significantly undervalued. However, financial results present concerning signals. Recent Q3 results showed net income plummeting 69% year-over-year to $11.2 million, with operating revenue declining 34% to $35.4 million. Earnings per unit dropped from $0.87 to $0.23, reflecting the combined impact of lower energy prices and reduced production volumes. Nevertheless, insider buying signals can be interpreted meaningfully from several perspectives. First, management may view current performance weakness as temporary. Given the nature of the royalty business, revenues fluctuate significantly with energy prices and production volumes, but the structure typically provides stable long-term cash flows. Second, the company's ongoing mineral rights acquisition strategy may serve as a future growth driver. The additional mineral rights acquisition announced in September can be understood in this context. Investors should focus on energy price recovery timing and the effects of the company's new acquisitions. If WTI crude stabilizes above $70 per barrel and natural gas prices rally 20% or more from current levels, $DMLP's profitability could improve rapidly. Conversely, if energy prices remain at current levels or decline further, performance weakness may persist. The continuity of insider buying also represents a crucial observation point. If management continues purchasing even if shares fall below $20, this could be interpreted as a strong bottom signal. Conversely, if buying stops or turns to selling, the current positive signals could weaken. In an optimistic scenario, $DMLP could rebound above $30 alongside energy market recovery. The base case scenario anticipates continued range-bound movement around current $25 levels, while the risk scenario doesn't exclude potential decline to $20 with further energy price weakness. At this point, a balanced approach between management confidence and performance concerns is necessary.