We often see insiders buying back shares of companies that are performing well over the long term. Unfortunately, there are also many examples of stock prices plummeting after insiders sell stocks. We will therefore examine whether any insiders have bought or sold shares of Lake Resources NL (ASX: LKE).
What is an insider?
It is perfectly legal for company insiders, including members of the board of directors, to buy and sell shares in a company. However, most countries require the company to disclose these transactions to the market.
We don’t believe shareholders should just follow insider trading. But it makes perfect sense to keep an eye on what insiders are doing. For example, a Columbia University to study found that “insiders are more likely to engage in open market purchases of their own company stocks when the company is about to reveal new deals with customers and suppliers.”
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The Last 12 Months of Insider Trading at Lake Resources
In the past twelve months, the biggest single sale by an insider was when CEO and Director Stephen Promnitz sold AU $ 100,000 of shares at a price of AU $ 0.055 per share. This means that even when the stock price was below the current price of AU $ 0.26, an insider wanted to cash in certain stocks. We generally consider this to be negative if insiders sold, especially if they did so below the current price, as this implies that they considered a lower price to be reasonable. While insider selling is not a positive sign, we cannot be sure that this means that insiders think stocks are fully valued, so it is only a weak sign. It should be noted that this sale represented only 11% of Stephen Promnitz’s stake. Stephen Promnitz has been the only individual insider to sell shares in the past twelve months.
Stephen Promnitz has sold 4.05 million shares in the past 12 months at an average price of AU $ 0.038. Below you can see a visual representation of insider trading (by businesses and individuals) over the past 12 months. If you click on the chart, you can see all of the individual trades including the stock price, individual and date!
I would like Lake Resources better if I see big insider buys. In the meantime, watch this free list of growing companies with significant and recent insider buying.
Lake Resources insiders sell their shares
In the past three months, some Lake Resources insiders have sold. Managing Director and Director Stephen Promnitz only sold A $ 52,000 in shares during this period. Neither the lack of buying nor the presence of selling is encouraging. But the volume sold is so low that we don’t really mind that.
Does Lake Resources boast strong insider ownership?
For an ordinary shareholder, it is worth checking out how many shares are owned by company insiders. We generally like to see fairly high levels of insider ownership. Lake Resources insiders own around A $ 26 million in shares. This equates to 10% of the business. We’ve certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest an alignment between insiders and other shareholders.
What might insider trading at Lake Resources tell us?
An insider recently sold stocks, but they didn’t buy. And even if we look at last year, we didn’t see any purchases. Insider ownership is not particularly high, so this analysis makes us cautious about the company. We are in no rush to buy! While we love to know what’s going on with insider ownership and trading, we also make sure to consider the risks a stock faces before making any investment decisions. Be aware that Lake Resources shows 4 warning signs in our investment analysis, and 2 of them are a bit rude …
But beware : Lake Resources might not be the best stock to buy. So take a look at this free list of interesting companies with high ROE and low debt.
For the purposes of this article, insiders are those persons who report their transactions to the relevant regulatory body. We currently account for open market transactions and private assignments, but not derivative transactions.
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