Patagonia Lithium's AU$1.5m Market Cap Fall Books Insider Losses

Insiders who bought AU$118.0k worth of Patagonia Lithium Limited's (ASX:PL3) stock at an average buy price of AU$0.14 over the last year may be disappointed by the recent 19% decrease in the stock. 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$87.1k, which is not what they expected.

Although we don't think shareholders should simply follow insider transactions, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Patagonia Lithium

The Last 12 Months Of Insider Transactions At Patagonia Lithium

Over the last year, we can see that the biggest insider purchase was by insider Niv Dagan for AU$112k worth of shares, at about AU$0.22 per share. That means that even when the share price was higher than AU$0.10 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. 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.

Patagonia Lithium insiders may have bought shares in the last year, but they didn't sell any. They paid about AU$0.14 on average. These transactions suggest that insiders have considered the current price attractive. 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!

There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company 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. Patagonia Lithium insiders own about AU$2.0m worth of shares. That equates to 33% 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 Do The Patagonia Lithium Insider Transactions Indicate?

It doesn't really mean much that no insider has traded Patagonia Lithium shares in the last quarter. But insiders have shown more of an appetite for the stock, over the last year. Insiders own shares in Patagonia Lithium and we see no evidence to suggest they are worried about the 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. Case in point: We've spotted 4 warning signs for Patagonia Lithium you should be aware of, and 2 of these can't be ignored.

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.