Insiders' AU$2.70m Investments In Red Following Patagonia Lithium's AU$836k Dip In Market Value

Insiders who bought AU$2.70m worth of Patagonia Lithium Limited's (ASX:PL3) stock at an average buy price of AU$0.081 over the last year may be disappointed by the recent 14% decrease in the stock. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only AU$1.40m.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

Our free stock report includes 5 warning signs investors should be aware of before investing in Patagonia Lithium. Read for free now.

The Last 12 Months Of Insider Transactions At Patagonia Lithium

The insider Jose Manzano made the biggest insider purchase in the last 12 months. That single transaction was for AU$2.4m worth of shares at a price of AU$0.08 each. That means that an insider was happy to buy shares at above the current price of AU$0.042. Their view may have changed since then, but at least it shows they felt optimistic at the time. In our view, the price an insider pays for shares is very important. As a general rule, we feel more positive about a stock if insiders have bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price.

Over the last year, we can see that insiders have bought 33.41m shares worth AU$2.7m. But they sold 10.00k shares for AU$860. In total, Patagonia Lithium insiders bought more than they sold over the last year. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

See our latest analysis for Patagonia Lithium

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).

Insiders At Patagonia Lithium Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Patagonia Lithium. Not only was there no selling that we can see, but they collectively bought AU$2.6m worth of shares. This makes one think the business has some good points.

Insider Ownership

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Patagonia Lithium insiders own 55% of the company, worth about AU$2.8m. Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Patagonia Lithium Insiders?

It's certainly positive to see the recent insider purchases. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss during the last year, which makes us a little cautious. Along with the high insider ownership, this analysis suggests that insiders are quite bullish about Patagonia Lithium. Nice! 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, Patagonia Lithium has 5 warning signs (and 4 which shouldn't be ignored) we think you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.