Need To Know: Kalium Lakes Limited (ASX:KLL) Insiders Have Been Buying Shares

It is not uncommon to see companies perform well in the years after insiders buy shares. On the other hand, we'd be remiss not to mention that insider sales have been known to precede tough periods for a business. So we'll take a look at whether insiders have been buying or selling shares in Kalium Lakes Limited (ASX:KLL).

What Is Insider Buying?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.

Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that 'insider purchases earn abnormal returns of more than 6% per year'.

Check out our latest analysis for Kalium Lakes

Kalium Lakes Insider Transactions Over The Last Year

The Non-Executive Director Brent Smoothy made the biggest insider purchase in the last 12 months. That single transaction was for AU$1.8m worth of shares at a price of AU$0.15 each. We do like to see buying, but this purchase was made at well below the current price of AU$0.20. Because it occurred at a lower valuation, it doesn't tell us much about whether insiders might find today's price attractive.

Happily, we note that in the last year insiders paid AU$3.2m for 21.17m shares. But insiders sold 12.00m shares worth AU$1.8m. In total, Kalium Lakes insiders bought more than they sold over the last year. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Does Kalium Lakes Boast High Insider Ownership?

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. A high insider ownership often makes company leadership more mindful of shareholder interests. Kalium Lakes insiders own about AU$27m worth of shares. That equates to 16% of the company. While this is a strong but not outstanding level of insider ownership, it's enough to indicate some alignment between management and smaller shareholders.

So What Does This Data Suggest About Kalium Lakes Insiders?

It doesn't really mean much that no insider has traded Kalium Lakes shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Kalium Lakes and we see no evidence to suggest they are worried about the future. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. For example, Kalium Lakes has 4 warning signs (and 3 which are a bit unpleasant) we think you should know about.

Of course Kalium Lakes may not be the best stock to buy. So you may wish to see this free collection of high quality companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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