Pioneer Lithium Reaches AU$9.5m Market Cap Benefiting Insider Stock Buying

Pioneer Lithium Limited (ASX:PLN) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 19%, resulting in a AU$1.5m rise in the company's market capitalisation, translating to a gain of 50% on their initial investment. In other words, the original AU$242.5k purchase is now worth AU$363.6k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

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Pioneer Lithium Insider Transactions Over The Last Year

In the last twelve months, the biggest single purchase by an insider was when Independent Non-Executive Chairman Agha Pervez bought AU$80k worth of shares at a price of AU$0.064 per share. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.16. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

Pioneer Lithium insiders may have bought shares in the last year, but they didn't sell any. The average buy price was around AU$0.11. It is certainly positive to see that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price. 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!

See our latest analysis for Pioneer Lithium

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.

Are Pioneer Lithium Insiders Buying Or Selling?

There was only a small bit of insider buying, worth AU$3.7k, in the last three months. Looking at the net result, we don't think these recent trades shed much light on how insiders, as a group, are feeling about the company's prospects.

Insider Ownership Of Pioneer Lithium

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. I reckon it's a good sign if insiders own a significant number of shares in the company. Pioneer Lithium insiders own about AU$4.8m worth of shares (which is 50% of the company). I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Does This Data Suggest About Pioneer Lithium Insiders?

Insider purchases may have been minimal, in the last three months, but there was no selling at all. The net investment is not enough to encourage us much. On a brighter note, the transactions over the last year are encouraging. Judging from their transactions, and high insider ownership, Pioneer Lithium insiders feel good about the company's future. While it's good to be aware of what's going on with the insider's ownership and transactions, we make sure to also consider what risks are facing a stock before making any investment decision. When we did our research, we found 7 warning signs for Pioneer Lithium (5 are a bit concerning!) that we believe deserve your full attention.

But note: Pioneer 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.