Don't Ignore The Insider Selling In Sigma Lithium

We'd be surprised if Sigma Lithium Corporation (NASDAQ:SGML) shareholders haven't noticed that the Co-Chairperson, Marcelo Freire de Paiva, recently sold US$134k worth of stock at US$5.17 per share. However, the silver lining is that the sale only reduced their total holding by 5.1%, so we're hesitant to read anything much into it, on its own.

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Sigma Lithium Insider Transactions Over The Last Year

Notably, that recent sale by Marcelo Freire de Paiva is the biggest insider sale of Sigma Lithium shares that we've seen in the last year. That means that even when the share price was below the current price of US$6.83, an insider wanted to cash in some shares. We generally consider it a negative if insiders have been selling, especially if they did so below the current price, because it implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we can't be sure if it does mean insiders think the shares are fully valued, so it's only a weak sign. It is worth noting that this sale was only 5.1% of Marcelo Freire de Paiva's holding.

In the last twelve months insiders purchased 4.66k shares for US$22k. But insiders sold 26.00k shares worth US$134k. 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!

See our latest analysis for Sigma Lithium

I will like Sigma Lithium better if I see some big insider buys. While we wait, check out this free list of undervalued and small cap stocks with considerable, recent, insider buying.

Does Sigma Lithium Boast High 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. A high insider ownership often makes company leadership more mindful of shareholder interests. Sigma Lithium insiders own about US$12m worth of shares. That equates to 1.7% of the company. 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 Do The Sigma Lithium Insider Transactions Indicate?

An insider hasn't bought Sigma Lithium stock in the last three months, but there was some selling. And our longer term analysis of insider transactions didn't bring confidence, either. Insider ownership isn't particularly high, so this analysis makes us cautious about the company. We'd practice some caution before buying! 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 found 3 warning signs for Sigma Lithium that deserve your attention before buying any shares.

Of course Sigma 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.