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We’ve lost count of how many times insiders have accumulated shares in a company that goes on to improve markedly. On the other hand, we’d be remiss not to mention that insider sales have been known to precede tough periods for a business. So we’ll take a look at whether insiders have been buying or selling shares in Nemaska Lithium Inc. (TSE:NMX).
What Is Insider Buying?
It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, rules govern insider transactions, and certain disclosures are required.
Insider transactions are not the most important thing when it comes to long-term investing. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Harvard University study found that ‘insider purchases earn abnormal returns of more than 6% per year.’
Nemaska Lithium Insider Transactions Over The Last Year
In the last twelve months, the biggest single purchase by an insider was when Director Paul-Henri Couture bought CA$91k worth of shares at a price of CA$1.05 per share. That means that even when the share price was higher, an insider wanted to purchase shares. 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. That purchase may suggest an expectation of positive returns over the long term.
Over the last year, we can see that insiders have bought 367.80k shares worth CA$318k. But they sold 28.00k for CA$19k. In total, Nemaska Lithium insiders bought more than they sold over the last year. They paid about CA$0.87 on average. This is nice to see since it implies that insiders might see value around current prices (around CA$0.60). You can see a visual depiction of insider transactions (by 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!
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Nemaska Lithium Have Bought Stock Recently
At Nemaska Lithium,over the last quarter, we have observed quite a lot more insider buying than insider selling. Insiders spent CA$99k on shares. On the other hand, Chantal Francoeur netted CA$19k by selling. We think insiders may be optimistic about the future, since insiders have been net buyers of shares.
For a common shareholder, it is worth checking how many shares are held by company 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. From looking at our data, insiders own CA$6.1m worth of Nemaska Lithium stock, about 1.2% of the company. We prefer to see high levels of insider ownership.
What Might The Insider Transactions At Nemaska Lithium Tell Us?
It’s certainly positive to see the recent insider purchases. And the longer term insider transactions also give us confidence. But we don’t feel the same about the fact the company is making losses. On this analysis the only slight negative we see is the fairly low (overall) insider ownership; their transactions suggest that they are quite positive on Nemaska Lithium stock. Of course, the future is what matters most. So if you are interested in Nemaska Lithium, you should check out this free report on analyst forecasts for the company.
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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.