As Piedmont Lithium Inc.'s (ASX:PLL)) market cap dropped by AU$111m, insiders who sold US$2.8m worth of stock were able to offset their losses

By
Simply Wall St
Published
December 16, 2021
ASX:PLL
Source: Shutterstock

Over the past year, insiders sold US$2.8m worth of Piedmont Lithium Inc. (ASX:PLL) stock at an average price of US$0.78 per share allowing them to get the most out of their money. The company’s market cap plunged by AU$111m after price dropped by 8.3% last week but insiders were able to limit their loss to an extent.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Piedmont Lithium

The Last 12 Months Of Insider Transactions At Piedmont Lithium

In the last twelve months, the biggest single sale by an insider was when the insider, Levi Mochkin, sold AU$2.8m worth of shares at a price of AU$0.78 per share. So what is clear is that an insider saw fit to sell at around the current price of AU$0.78. While insider selling is a negative, to us, it is more negative if the shares are sold at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign. Levi Mochkin was the only individual insider to sell over the last year.

You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
ASX:PLL Insider Trading Volume December 16th 2021

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. We usually like to see fairly high levels of insider ownership. It appears that Piedmont Lithium insiders own 11% of the company, worth about AU$137m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Does This Data Suggest About Piedmont Lithium Insiders?

The fact that there have been no Piedmont Lithium insider transactions recently certainly doesn't bother us. It's great to see high levels of insider ownership, but looking back over the last year, we don't gain confidence from the Piedmont Lithium insiders selling. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Be aware that Piedmont Lithium is showing 2 warning signs in our investment analysis, and 1 of those is significant...

Of course Piedmont 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, but not derivative transactions.

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