Insiders Who Sold Lithium Universe Missed Out On 13% Stock Increase

Despite the fact that Lithium Universe Limited (ASX:LU7) stock rose 13% last week, insiders who sold AU$627k worth of stock in the previous 12 months are likely to be better off. Holding on to stock would have meant their investment would be worth less now than it was at the time of sale. Thus selling at an average price of AU$0.012, which is higher than the current price, may have been the best decision.

While insider transactions are not the most important thing when it comes to long-term investing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Lithium Universe

Lithium Universe Insider Transactions Over The Last Year

The insider, Bilal Ahmad, made the biggest insider sale in the last 12 months. That single transaction was for AU$627k worth of shares at a price of AU$0.012 each. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. It's of some comfort that this sale was conducted at a price well above the current share price, which is AU$0.009. So it may not tell us anything about how insiders feel about the current share price. The only individual insider seller over the last year was Bilal Ahmad.

In the last twelve months insiders purchased 4.17m shares for AU$50k. But they sold 52.25m shares for AU$627k. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

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Lithium Universe Insiders Bought Stock Recently

Over the last three months, we've seen a bit of insider buying at Lithium Universe. Insiders bought AU$50k worth of shares in that time. We like it when there are only buyers, and no sellers. But the amount invested in the last three months isn't enough for us too put much weight on it, as a single factor.

Insider Ownership

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with 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 34% of Lithium Universe shares, worth about AU$3.1m. 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 Lithium Universe Tell Us?

Insider purchases may have been minimal, in the last three months, but there was no selling at all. That said, the purchases were not large. We don't take much encouragement from the transactions by Lithium Universe insiders. The modest level of insider ownership is, at least, some comfort. 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. In terms of investment risks, we've identified 5 warning signs with Lithium Universe and understanding these should be part of your investment process.

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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 of direct interests only, but not derivative transactions or indirect interests.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.