Insiders were net buyers of Patagonia Lithium Limited's (ASX:PL3 ) stock during the past year. That is, insiders bought more stock than they sold.

Although we don't think shareholders should simply follow insider transactions, we do think it is perfectly logical to keep tabs on what insiders are doing.

View our latest analysis for Patagonia Lithium

The Last 12 Months Of Insider Transactions At Patagonia Lithium

The insider Niv Dagan made the biggest insider purchase in the last 12 months. That single transaction was for AU$117k worth of shares at a price of AU$0.12 each. So it's clear an insider wanted to buy, even at a higher price than the current share price (being AU$0.074). It's very possible they regret the purchase, but it's more likely they are bullish about the company. We always take careful note of the price insiders pay when purchasing shares. As a general rule, we feel more positive about a stock when an insider has bought shares at above current prices, because that suggests they viewed the stock as good value, even at a higher price. The only individual insider to buy over the last year was Niv Dagan. We note that Niv Dagan was both the biggest buyer and the biggest seller.

Niv Dagan bought a total of 1.83m shares over the year at an average price of AU$0.11. You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you want to know exactly who sold, for how much, and when, simply click on the graph below!

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of undervalued small cap companies that insiders are buying.

Insider Ownership

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. It's great to see that Patagonia Lithium insiders own 44% of the company, worth about AU$2.4m. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.

So What Do The Patagonia Lithium Insider Transactions Indicate?

The fact that there have been no Patagonia Lithium insider transactions recently certainly doesn't bother us. However, our analysis of transactions over the last year is heartening. With high insider ownership and encouraging transactions, it seems like Patagonia Lithium insiders think the business has merit. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. Our analysis shows 4 warning signs for Patagonia Lithium (2 make us uncomfortable!) and we strongly recommend you look at these before investing.

But note: Patagonia Lithium may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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.