Insiders Could Have Profited By Holding onto Li-Cycle Holdings Shares Despite 11% Drop

Despite the fact that Li-Cycle Holdings Corp.'s (NYSE:LICY) value has dropped 11% in the last week insiders who sold US$1.5m worth of stock in the past 12 months have had less success. The average selling price of US$3.87 is still lower than the current share price, or in other words, insiders would have been better off holding on to their shares.

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 Li-Cycle Holdings

Li-Cycle Holdings Insider Transactions Over The Last Year

Over the last year, we can see that the biggest insider sale was by the insider, Tim Johnston, for US$1.1m worth of shares, at about US$4.09 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The silver lining is that this sell-down took place above the latest price (US$1.74). So it may not shed much light on insider confidence at current levels.

In total, Li-Cycle Holdings insiders sold more than they bought 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!

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Have Li-Cycle Holdings Insiders Traded Recently?

Over the last three months, we've seen a bit of insider buying at Li-Cycle Holdings. Independent Director Mark Wellings bought US$18k worth in that time. But Chief Operating Officer Conor Spollen sold US$9.4k worth. While it's good to see the insider buying, the net amount bought isn't enough for us to gain much confidence from it.

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. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 16% of Li-Cycle Holdings shares, worth about US$7.6m. 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 Li-Cycle Holdings 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. Recent sales exacerbate our caution arising from analysis of Li-Cycle Holdings insider transactions. But we do like the fact that insiders own a fair chunk of the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. At Simply Wall St, we've found that Li-Cycle Holdings has 6 warning signs (3 are significant!) that deserve your attention before going any further with your analysis.

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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.