Insiders Give Up AU$65k As Patagonia Lithium Stock Drops To AU$0.072

Insiders who acquired AU$196.2k worth of Patagonia Lithium Limited's (ASX:PL3) stock at an average price of AU$0.11 in the past 12 months may be dismayed by the recent 10.0% price decline. Insiders invest with the hopes of seeing their money grow in value over time. However, as a result of recent losses, their initial investment is now only worth AU$131.4k, which is not what they expected.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we would consider it foolish to ignore insider transactions altogether.

View our latest analysis for Patagonia Lithium

Patagonia Lithium Insider Transactions Over The Last Year

The insider Niv Dagan made the biggest insider purchase in the last 12 months. That single transaction was for AU$117k worth of shares at a price of AU$0.12 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.072). 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. In our view, the price an insider pays for shares is very important. It is encouraging to see an insider paid above the current price for shares, as it suggests they saw value, even at higher levels. The only individual insider to buy over the last year was Niv Dagan. We note that Niv Dagan was both the biggest buyer and the biggest seller.

Niv Dagan bought a total of 1.83m shares over the year at an average price of AU$0.11. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

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.

Does Patagonia Lithium Boast High 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Patagonia Lithium insiders own 44% of the company, currently worth about AU$2.4m based on the recent share price. 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?

There haven't been any insider transactions in the last three months -- that doesn't mean much. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like Patagonia Lithium insiders think the business has merit. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Patagonia Lithium. For example, Patagonia Lithium has 4 warning signs (and 2 which can't be ignored) we think you should know about.

Of course Patagonia Lithium 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.