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Need To Know: Standard Lithium Ltd. (CVE:SLL) Insiders Have Been Buying Shares

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 Standard Lithium Ltd. (CVE:SLL).

Do Insider Transactions Matter?

It is perfectly legal for company insiders, including board members, to buy and sell stock in a company. However, such insiders must disclose their trading activities, and not trade on inside information.

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We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. For example, a Columbia University study found that 'insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers'.

Check out our latest analysis for Standard Lithium

The Last 12 Months Of Insider Transactions At Standard Lithium

Founder & Independent Director Anthony Alvaro made the biggest insider purchase in the last 12 months. That single transaction was for CA$100k worth of shares at a price of CA$1.00 each. That means that an insider was happy to buy shares at above the current price of CA$0.87. 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. To us, it's very important to consider the price insiders pay for shares. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

In the last twelve months Standard Lithium insiders were buying shares, but not selling. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

TSXV:SLL Recent Insider Trading, February 19th 2020
TSXV:SLL Recent Insider Trading, February 19th 2020

Standard Lithium is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders at Standard Lithium Have Bought Stock Recently

Over the last quarter, Standard Lithium insiders have spent a meaningful amount on shares. We can see that President Andrew Robinson paid CA$89k for shares in the company. No-one sold. This could be interpreted as suggesting a positive outlook.

Does Standard Lithium Boast High Insider Ownership?

Many investors like to check how much of a company is owned by insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Based on our data, Standard Lithium insiders have about 4.9% of the stock, worth approximately CA$3.8m. However, it's possible that insiders might have an indirect interest through a more complex structure. We prefer to see high levels of insider ownership.

So What Does This Data Suggest About Standard Lithium Insiders?

The recent insider purchase is heartening. We also take confidence from the longer term picture of insider transactions. But on the other hand, the company made a loss last year, which makes us a little cautious. We would certainly prefer see higher levels of insider ownership but analysis of the insider transactions suggests that Standard Lithium insiders are expecting a bright future. If you are like me, you may want to think about whether this company will grow or shrink. Luckily, you can check this free report showing analyst forecasts for its future.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting 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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.