Directors are Buying These ASX Stocks: Should You?

When company directors buy shares as prices fall, it is tempting to assume they know a recovery is coming. But their confidence doesn't tell you whether the share price has stopped falling or whether the investment suits your timeframe.

In this week’s Hot Stock Tips, Wealth Within senior analyst Filip Tortevski and analyst Pedro Banales examined director purchases at Pinnacle Investment Management, Adairs and Netwealth. All three present an interesting combination: insiders committing money, businesses facing uncertainty and prices testing important technical levels. The opportunity lies in recognising a potential turnaround before it becomes obvious. The risk is buying before the market confirms it.

An index trading near its highs can also disguise weakness in individual shares. Concentrated buying in parts of the market does not mean every business is rising. That makes individual price analysis essential when looking for recovery opportunities.

Pinnacle: director confidence meets private credit uncertainty

At Pinnacle Investment Management Group (ASX: PNI), Deborah Beale bought 15,000 shares on 21 September 2026 for approximately $207,000, followed by another 5,000 on 30 September for about $66,000. Lorraine Berends bought 1,500 shares on 29 September for $20,880. These three on-market purchases totalled approximately $294,000.

The timing matters. Pinnacle has an approximately 35% equity interest in Metrics Credit Holdings, the parent of Metrics Credit Partners. Three Metrics listed funds requested temporary suspension on 28 September as audited valuations differed from preliminary figures. Reporting on the Metrics fund valuation adjustments identified reductions ranging from 1.9% to 12.1% in net tangible assets per unit. Two of the highlighted director purchases followed those suspensions.

That creates a useful question: are the directors seeing an overreaction, or could further uncertainty keep pressure on the shares? The purchases alone cannot settle it.

Our technical analysis identifies $12 as an important level for Pinnacle to hold. The share price had corrected roughly 50% from its peak, with buying emerging during October. However, a large fall does not automatically make a stock cheap or establish a bottom. Pinnacle has experienced deeper declines in previous cycles.

A few rising weeks are encouraging, but the structure of a convincing reversal is not yet in place. Holding around $12 and developing further strength would make the recovery case more interesting. A confirmed turnaround could offer double-digit growth, but that remains conditional on what price does next. For now, this is a stock to monitor closely rather than a recovery to assume.

Adairs: a familiar support zone, but a turnaround still isn't proven

Adairs (ASX: ADH) offers a different version of the same dilemma. Chairman Trent Peterson bought 300,000 shares on the market on 6 October 2026 for approximately $377,000, committing a substantial amount while the retailer faced a mixed operating picture.

The company’s FY26 annual report and financial results show group sales rising 3.8% to $641.7 million, with Mocka sales up 22.9%. Yet Focus on Furniture’s underlying operating earnings fell 67.6%. An impairment at that business contributed to a statutory net loss. The challenge is whether improvement elsewhere in the group can be matched by a successful turnaround at Focus on Furniture.

Leadership uncertainty adds to that challenge. Elle Roseby gave notice of her resignation as group chief executive in September, with a transition period expected to run into March 2027. Her resignation announcement preceded Peterson’s purchase.

On the chart, the attraction is a support area that has repeatedly mattered through earlier market cycles. Around $1.30 has acted as an important historical reference, while $1.25 is the immediate line in the sand in our analysis. Repeated holds near this area and buying after sharp selling suggest the stock deserves attention.

Pedro’s wider boundaries are $1.20 on the downside and $1.50 on the upside. These levels serve different purposes: a break below $1.20 would challenge the support case, while strength above $1.50 would provide further evidence of a turnaround. They should not be treated as interchangeable with the $1.25 reference.

This setup has potential across short, medium and longer timeframes if a reversal develops. But buying simply because a stock reaches support leaves the most important questions unanswered. What confirms the entry? What happens if support fails? How will you protect the profit if the shares rise and then retreat? A promising level needs a complete trading plan.

Netwealth: record assets do not remove growth concerns

At Netwealth Group (ASX: NWL), Kate Temby bought 2,000 shares on 25 September for approximately $34,000. Sarah Brennan followed on 28 September with 7,761 shares for about $130,000, more than doubling her previous holding. Together, those purchases represented approximately $164,000.

The subsequent September quarterly business update, released on 15 October, reported record funds under administration of $139.2 billion, up 15.2% year on year. However, Netwealth reduced FY27 net flow guidance from $18–20 billion to $17–19 billion on a pre-Paradino basis. A business can continue growing while investors reassess what they are prepared to pay for that growth.

There is also a longer-term technology story. Netwealth’s announced acquisition of Paradino involves an Australian AI platform for financial advisers, with initial consideration of $20 million. The acquisition was announced on 15 September, before the director purchases, with completion expected by the end of October. It offers context for the company’s development but does not establish the directors’ reasons for buying or guarantee future profits.

Technically, Netwealth has returned towards a long-term trend area that has mattered during earlier corrections, including 2019, the COVID period and 2022–23. The $15 level is particularly important in our analysis.

Sharp selling in the week of 16 October was met by buyers, with volume also picking up. That response is worth watching, but one week is too early to declare a reversal. The next move matters: does buying attract further demand, or does selling resume?

For a more conservative approach, a break above $19 would provide additional confirmation. Other technical triggers may suit different timeframes, but the analysis does not establish a single entry point for every investor. A sustained reversal could offer substantial upside; continued weakness would tell a different story.

Use director buying to investigate, then let price confirm

The common thread is the gap between confidence in a business and evidence of a profitable entry. Directors may be investing over a much longer period than you intend to hold. Their financial circumstances and connection to the company also differ from yours. Copying their transaction means adopting a decision without necessarily sharing its objectives.

Fundamental analysis helps explain the business opportunity and its risks. Technical analysis helps assess whether buyers are taking control, where the opportunity may fail and whether the timing suits your strategy. Neither a director purchase nor a familiar support level replaces disciplined entry and exit rules.

This is the value of developing your own analysis skills. Wealth Within’s Diploma of Share Trading and Investment (11398NAT) builds the knowledge needed to assess price behaviour, manage risk and make decisions using a structured approach.

Final thoughts

For these three stocks, watch whether Pinnacle can hold $12 and build a stronger reversal, whether Adairs can defend its support area and strengthen towards $1.50, and whether Netwealth’s buying response develops into sustained strength. Director buying has put them on the radar. What price does next will determine whether the opportunity deserves your capital.

Understanding when to buy shares takes more than following what company directors are doing. It requires knowledge, proven trading strategies and the ability to assess opportunities while managing risk. Wealth Within has been educating traders since 2002, helping them develop the skills to make informed decisions in the share market. If you would like to learn more about our approach to trading, discover Dale Gillham's bestselling book, How to Beat the Managed Funds by 20%, which has sold more than 24,000 copies.