Bullish Lithium Ionic Insider Buying Worth CA$1.43m Yet To Pay Off

Insiders who acquired CA$1.43m worth of Lithium Ionic Corp.'s (CVE:LTH) stock at an average price of CA$1.01 in the past 12 months may be dismayed by the recent 10% price decline. Insiders buy with the expectation to see their investments rise in value over a period of time. However, recent losses have rendered their above investment worth CA$863.2k which is not ideal.

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 Lithium Ionic

The Last 12 Months Of Insider Transactions At Lithium Ionic

The CEO & Director Blake Hylands made the biggest insider purchase in the last 12 months. That single transaction was for CA$105k worth of shares at a price of CA$0.90 each. That means that an insider was happy to buy shares at above the current price of CA$0.61. 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. To us, it's very important to consider the price insiders pay for shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

While Lithium Ionic insiders bought shares during the last year, they didn't sell. Their average price was about CA$1.01. This is nice to see since it implies that insiders might see value around current prices. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!

Lithium Ionic is not the only stock that insiders are buying. For those who like to find small cap companies at attractive valuations, this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders At Lithium Ionic Have Bought Stock Recently

Over the last three months, we've seen significant insider buying at Lithium Ionic. Not only was there no selling that we can see, but they collectively bought CA$780k worth of shares. This is a positive in our book as it implies some confidence.

Insider Ownership Of Lithium Ionic

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. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Insiders own 19% of Lithium Ionic shares, worth about CA$18m. 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 Does This Data Suggest About Lithium Ionic Insiders?

It is good to see recent purchasing. And the longer term insider transactions also give us confidence. However, we note that the company didn't make a profit over the last twelve months, which makes us cautious. Insiders likely see value in Lithium Ionic shares, given these transactions (along with notable insider ownership of the company). 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. To that end, you should learn about the 5 warning signs we've spotted with Lithium Ionic (including 2 which are potentially serious).

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity 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.