DMLP

Dorchester Minerals ($DMLP): Why CEO Bought $3.48M Despite 69% Net Income Plunge

12/03/2025 22:43

Dorchester Minerals ($DMLP) has experienced over 24% decline in stock price this year, yet the persistent insider buying from management and board members is sending intriguing signals to investors. This company operates as an energy royalty firm owning and managing oil and gas mineral interests across the United States, with a market capitalization of approximately $1.07 billion. The most noteworthy aspect is management's behavior following the November earnings announcement. After the company reported shocking Q3 results with net income plummeting 69% (from $36.4M to $11.2M) and operating revenue dropping 34% (from $53.5M to $35.4M), CEO Bradley Ehrman and CFO Leslie Moriyama immediately engaged in significant purchases. CEO Ehrman bought $3.487 million worth of shares over two days (November 25-26), while CFO Moriyama added $65,000 worth during the same period. What makes this more interesting is that their buying isn't a one-time occurrence. Examining the management buying pattern since June 2024 reveals CEO purchases in June, December 2024, March 2025, and recently in November. The CFO has also maintained consistent buying positions from November 2024, December 2024, through recent months. Notably, they've been purchasing not only when shares were at $30+ highs but also consistently at current $21-25 lows. Detailed analysis of insider trading data shows Dorchester Minerals Operating LP, a related entity, conducted 11 separate large-scale purchases from July 2024 through May 2025. This transcends individual investor judgment, appearing to be strategic corporate-level decisions. Total purchase amounts exceed $1.6 million, suggesting insiders view current price levels as significantly undervalued. Despite these strong insider buying signals, the stock continues declining due to clear reasons: overall energy royalty sector difficulties combined with the company's short-term performance deterioration are heightening market concerns. The Q3 earnings per unit drop from $0.87 to $0.23 year-over-year particularly shocked investors. However, September's announced mineral interest acquisition plan offers an alternative perspective. The company's continued investment for long-term growth despite short-term performance deterioration aligns with management's persistent buying behavior. Given energy royalty business characteristics, securing mineral rights is crucial for future profitability. Key indicators investors should monitor include quarterly performance improvements and energy price trends. If insider buying signals prove correct, performance improvements alongside energy price recovery could provide significant upside potential from current $25 levels. Conversely, continued energy sector weakness and persistent performance struggles could risk further declines despite insider buying. Three notable scenarios emerge. Most optimistically, energy price recovery combined with revenue improvements from newly acquired mineral rights could see shares reclaim early-year $33 levels. The base scenario anticipates sideways movement around current levels, with insider buying providing downside support. The most negative scenario involves continued energy sector weakness with additional performance deterioration, potentially pushing shares below $20. In conclusion, Dorchester Minerals stands at a crossroads between short-term performance struggles and long-term value. While persistent large-scale buying from management and board members sends positive signals, this alone cannot guarantee near-term price appreciation. Energy-sensitive investors might consider waiting, but for long-term value investors, current levels may warrant consideration.