Patriot Lithium Insiders Are Down AU$56k But Regain Some Losses

Insiders who bought AU$473.0k worth of Patriot Lithium Limited (ASX:PAT) stock in the last year recovered part of their losses as the stock rose by 15% last week. However, the purchase is proving to be a costly gamble, since losses made by insiders have totalled AU$56k since the time of purchase.

Although we don't think shareholders should simply follow insider transactions, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Patriot Lithium

Patriot Lithium Insider Transactions Over The Last Year

The Executive Chairperson & CEO Hugh Warner made the biggest insider purchase in the last 12 months. That single transaction was for AU$100k worth of shares at a price of AU$0.075 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.053). 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. We always take careful note of the price insiders pay when purchasing 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.

Patriot Lithium insiders may have bought shares in the last year, but they didn't sell any. They paid about AU$0.06 on average. I'd consider this a positive as it suggests insiders see value at around the current price. 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!

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

Patriot Lithium Insiders Bought Stock Recently

Over the last three months, we've seen significant insider buying at Patriot Lithium. In total, insiders bought AU$155k worth of shares in that time, and we didn't record any sales whatsoever. This is a positive in our book as it implies some confidence.

Does Patriot Lithium Boast High Insider Ownership?

For a common shareholder, it is worth checking how many shares are held by company insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Patriot Lithium insiders own about AU$1.8m worth of shares. That equates to 27% of the company. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Does This Data Suggest About Patriot Lithium Insiders?

It's certainly positive to see the recent insider purchases. And an analysis of the transactions over the last year also gives us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Given that insiders also own a fair bit of Patriot Lithium we think they are probably pretty confident of a bright 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 5 warning signs for Patriot Lithium (4 make us uncomfortable) you should be aware of.

But note: Patriot Lithium may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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.