We've lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in International Lithium Corp. (CVE:ILC).
Do Insider Transactions Matter?
Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, most countries require that the company discloses such transactions to the market.
We would never suggest that investors should base their decisions solely on what the directors of a company have been doing. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise'.
The Last 12 Months Of Insider Transactions At International Lithium
insider Peter Kucak previously made an even bigger purchase of CA$403k worth of shares at a price of CA$0.055 per share. We do like to see buying, but this purchase was made at well below the current price of CA$0.085. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.
Happily, we note that in the last year insiders paid CA$1.3m for 22.93m shares. But insiders sold 12.95m shares worth CA$1.0m. In the last twelve months there was more buying than selling by International Lithium insiders. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!
International Lithium is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Insiders at International Lithium Have Bought Stock Recently
There has been significantly more insider buying, than selling, at International Lithium, over the last three months. Insiders spent CA$1.1m on shares. On the other hand, insiders netted CA$903k by selling. The buying outweighs the selling, which suggests that insiders may believe the company will do well in the future.
Does International Lithium Boast High 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 International Lithium insiders own 35% of the company, worth about CA$5.6m. 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 International Lithium Insiders?
It is good to see recent purchasing. And an analysis of the transactions over the last year also gives 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 International Lithium shares, given these transactions (along with notable insider ownership of the company). While we like knowing 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. To that end, you should learn about the 5 warning signs we've spotted with International Lithium (including 2 which are potentially serious).
Of course International 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.
This article by Simply Wall St is general in nature. 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.
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