Insiders Buy Smith Douglas Stock Amid Share Buyback Plan & Stock Weakness

Smith Douglas Homes Corp. (SDHC:US), a Woodstock, Georgia-based homebuilder targeting first-time and empty-nest buyers, went public in January 2024 and has quickly built scale, closing 2,867 homes in 2024 alone. It now ranks #32 on Builder Magazine’s Top 100 list, boasting a market cap of $976 million. Despite a strong operational foundation and an impressive return on equity (ROE) of 27%, the stock has slid nearly 27% over the past three months.

While Wall Street has grown cautious, insiders are sending a very different signal.

Insiders Snapped Up $1.3M in Stock in 3 Weeks

Between mid-May and early June 2025, Smith Douglas insiders collectively bought over $1.34 million worth of stock on the open market, a strong show of confidence in the company’s future.

Key participants include:

• Founder Thomas Bradbury, who made the largest single purchase, buying $700K+ in shares.

• CFO Russell Devendorf, who increased his already substantial holdings by 3,000 shares worth $50.39K.

• Director Sonny Perdue, who accumulated over 19,000 shares across multiple purchases in early June, spending $363K.

• Other board members also participated, including Neill Faucett and Jeffrey Jackson.

Such broad participation from senior leadership and board members suggests a strong internal conviction that the current share price undervalues the company’s long-term potential.

A $50M Buyback Signals Insider Confidence

On May 22, Smith Douglas Homes announced a $50 million stock repurchase program, citing the belief that shares are undervalued. The buyback will be funded from the company's existing cash and future cash flows, providing flexibility in timing and execution.

“This repurchase authorization underscores the Board and Management’s belief that at times our share price may be undervalued relative to our long-term opportunity,” said CEO Greg Bennett.

The announcement followed closely on the heels of the initial wave of insider buys, reinforcing the message that the leadership team sees substantial value in the stock.

Strong ROE, Flat Earnings Spark Concern

Smith Douglas boasts a 27% return on equity, well above the 15% industry average, yet earnings have declined over the past years. This disconnect between capital efficiency and earnings growth raises questions about reinvestment strategy and business momentum.

Unlike peers in the homebuilding space, which have seen earnings grow ~12% annually as per Simply Wall Street, Smith Douglas has lagged. The company does not pay dividends, implying that profits are being retained, but not yet translating into growth.

A Contrarian Opportunity?

With the stock down, insiders buying aggressively, and a sizable repurchase plan in motion, Smith Douglas Homes may be setting up for a rebound. If the company can translate its capital efficiency into renewed earnings growth, the recent weakness could represent a rare contrarian entry point.