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It is usually uneventful when a single insider buys stock. However, When quite a few insiders buy shares, as it happened in Patagonia Lithium Limited's (ASX:PL3) case, it's fantastic news for shareholders.
While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.
Check out our latest analysis for Patagonia Lithium
The Last 12 Months Of Insider Transactions At Patagonia Lithium
In the last twelve months, the biggest single purchase by an insider was when insider Niv Dagan bought AU$112k worth of shares at a price of AU$0.22 per share. That means that an insider was happy to buy shares at above the current price of AU$0.07. While their view may have changed since the purchase was made, this does at least suggest they have had confidence in the company's future. To us, it's very important to consider the price insiders pay for shares. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price.
Patagonia Lithium insiders may have bought shares in the last year, but they didn't sell any. They paid about AU$0.13 on average. This is nice to see since it implies that insiders might see value around current prices. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. By clicking on the graph below, you can see the precise details of each insider transaction!
There are always plenty of stocks that insiders are buying. If investing in lesser known companies is your style, you could take a look at this free list of companies. (Hint: insiders have been buying them).
Insider Ownership
For a common shareholder, it is worth checking how many shares are held by company insiders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 33% of Patagonia Lithium shares, worth about AU$1.4m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.
What Might The Insider Transactions At Patagonia Lithium Tell Us?
The fact that there have been no Patagonia Lithium insider transactions recently certainly doesn't bother us. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Patagonia Lithium and we see no evidence to suggest they are worried about the future. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. For instance, we've identified 4 warning signs for Patagonia Lithium (3 can't be ignored) you should be aware of.