Shareholders may not want to ignore C$2.2 million worth of sales by Sigma Lithium Corporation (NASDAQ:SGML) insiders last year
Whereas Sigma Lithium Corporation (NASDAQ:SGML) Shareholders had a good week with shares up 9.3%, they should remain vigilant. Although prices were relatively low, insiders chose to sell C$2.2 million worth of shares over the past 12 months. It could be a sign of impending weakness.
Although we would never suggest that investors base their decisions solely on what a company’s directors have done, logic dictates that you should be careful about whether insiders are buying or selling shares.
Check out our latest analysis for Sigma Lithium
Sigma Lithium Insider Trading Over the Past Year
In the past twelve months, the largest single sale by an insider was when independent director Frederico Marques sold $1.0 million worth of shares at $17.78 per share. This means that even when the stock price was below the current price of US$22.84, an insider wanted to cash out some shares. We generally consider it negative if insiders sold, especially if they did below the current price, as this implies that they considered a lower price to be reasonable. However, while insider selling is sometimes discouraging, this is only a weak signal. We note that the largest sale involved only 24% of Frederico Marques’ stake.
Last year, Sigma Lithium insiders did not buy any shares of the company. The chart below shows insider trading (by companies and individuals) over the past year. By clicking on the graph below, you will be able to see the precise detail of each insider trade!
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Sigma Lithium insiders recently sold shares
Over the past three months, we have seen significant insider selling at Sigma Lithium. In total, insider George Wesley Roberts sold US$219,000 worth of shares during this time, and we recorded no purchases. All in all, that makes us a little cautious, but that’s not all.
Insider Ownership of Sigma Lithium
Many investors like to check how much a company is owned by insiders. We generally like to see fairly high levels of insider ownership. Sigma Lithium insiders own about $30 million in stock. This equates to 1.3% of the business. We have certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest an alignment between insiders and other shareholders.
So what do Sigma Lithium’s insider trading indicate?
An insider recently sold shares, but did not buy. And there have been no purchases to comfort us in the past year. Insider ownership is not particularly high, so this analysis makes us cautious about the company. We would therefore only buy after careful consideration. So these insider trades can help us build a thesis on the stock, but it’s also helpful to know the risks this company faces. Our analysis shows 3 warning signs for Sigma Lithium (1 is a little worrying!) and we strongly recommend that you consult them before investing.
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For the purposes of this article, insiders are persons who report their transactions to the relevant regulatory body. We currently record open market transactions and private dispositions, but not derivative transactions.
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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
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