Lynas Rare Earths Insider Lowered Holding By 20% During Last Year

From what we can see, insiders were net sellers in Lynas Rare Earths Limited's (ASX:LYC ) during the past 12 months. That is, insiders sold the stock in greater numbers than they purchased it.

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.

See our latest analysis for Lynas Rare Earths

Lynas Rare Earths Insider Transactions Over The Last Year

The MD, CEO & Director, Amanda Lacaze, made the biggest insider sale in the last 12 months. That single transaction was for AU$4.0m worth of shares at a price of AU$7.09 each. That means that even when the share price was below the current price of AU$7.75, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 20% of Amanda Lacaze's holding. Amanda Lacaze was the only individual insider to sell shares in the last twelve months.

In the last twelve months insiders purchased 41.29k shares for AU$240k. On the other hand they divested 569.84k shares, for AU$4.0m. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: Most of them are flying under the radar).

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. I reckon it's a good sign if insiders own a significant number of shares in the company. Lynas Rare Earths insiders own about AU$31m worth of shares. That equates to 0.4% 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.

What Might The Insider Transactions At Lynas Rare Earths Tell Us?

There haven't been any insider transactions in the last three months -- that doesn't mean much. Still, the insider transactions at Lynas Rare Earths in the last 12 months are not very heartening. The modest level of insider ownership is, at least, some comfort. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. When we did our research, we found 2 warning signs for Lynas Rare Earths (1 is a bit concerning!) that we believe deserve your full attention.

Of course Lynas Rare Earths 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 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.