Why are 3 directors buying up this ASX lithium stock?

Not one, not two, but three Nova directors have been buying shares of late.

| More on:
A hipster-looking man with bushy beard and multiple arm tattoos sits on the floor against a sofa reading a tablet with his hand on his chin as though he is deep in thought.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

When it comes to ASX lithium stocks, Nova Minerals Ltd (ASX: NVA) is probably not a share that initially comes to mind. But Nova Minerals is a $74 million company that has been listed on the ASX for more than two decades.

It is primarily a gold company, but also has a significant stake in lithium, primarily through its 37% stake in the USlisted Snow Lake Lithium

Nova shares have had a tough time of late, unlike many of its larger lithium peers. While shares like Pilbara Minerals Ltd (ASX: PLS) have boomed over the past 12 months, Nova shares have retreated by a painful 57.7% or so:

But Nova has one thing going for it right now – the unbridled enthusiasm of its management team.

Nova released a series of ASX notices on 13 April earlier this month. These showed that not one, not two, but three of its directors have been buying up shares of this ASX lithium stock. Including the CEO.

Nova management buys up shares hand over fist

Firstly, there was Craig Bently, director of finance and compliance at Nova. The ASX release shows that Bently purchased 300,000 additional Nova shares on 12 April for a cost of $100,450. That brings his total holdings (both direct and indirect) to more than 2 million shares.

Then there was executive director Louie Simens. ASX records show Simens bought 114,200 shares on 12 April as well, for a sum of just under $40,000. He now owns roughly 8 million Nova Minerals shares, both directly and indirectly.

Last, but certainly not least, we have Nova Minerals director and CEO Christopher Gerteisen. Gerteisen also picked up an extra 95,000 shares on 12 April, for a total cost of $30,850. That lifts his total holdings to just under 900,000 shares.

So why are these directors all buying up shares right now? Well, we don't know for sure – no reasoning was given with these purchase notices. But we can assume that these buys went through for the same reason that most do – the buyers think it is a wise investment that will make them money over time.

In a recent investor presentation, Nova Minerals argued that it is undervalued. The company pointed to its estimated reserves of 9.9 million tonnes against its market capitalisation and argued that it is trading at a significant discount against other ASX gold miners.

But only time will tell if these director buys prove to be canny investments. No doubt shareholders will appreciate the financial dedication of management though.

 

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Materials Shares

Miner standing in front of trucks and smiling, symbolising a rising share price.
Materials Shares

Core Lithium share price storming higher on 'excellent' exploration results

ASX investors are sending Core Lithium shares flying higher today.

Read more »

Image of young successful engineer, with blueprints, notepad and digital tablet, observing the project implementation on construction site and in mine.
Materials Shares

Forget Fortescue and buy this ASX mining stock for a 30%+ return

Goldman Sachs thinks this miner is a far better option for investors seeking iron ore exposure.

Read more »

Man with his hand on his face looking at a falling share price chart on a tablet.
Materials Shares

Is the beaten down Mineral Resources share price a bargain buy now?

Let's see what Bell Potter is saying about the miner after Monday's selloff.

Read more »

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Materials Shares

Why did the Core Lithium share price hit a wall in October?

The Core Lithium share price rally came to an abrupt end in October. But why?

Read more »

Businessman walking down staircase with suitcase, at sunrise
Materials Shares

Mineral Resources shares sink 7% on CEO exit and 'major actions'

This mining company's CEO is leaving following a scandal.

Read more »

A man wearing glasses and a white t-shirt pumps his fists in the air looking excited and happy about the rising OBX share price
Materials Shares

Why this ASX lithium stock almost doubled in value in October

This lithium miner made its shareholders smile last month. But why?

Read more »

A woman jumps for joy with a rocket drawn on the wall behind her.
Materials Shares

Guess which ASX All Ords stock just rocketed 80%

What is getting investors excited about this stock today? Let's find out.

Read more »

two businessmen shake hands in a close up mid-level shot with other businesspeople looking on approvingly in the background.
Materials Shares

Core Lithium share price higher on 'invaluable' ex-Rio Tinto appointment

The lithium miner has made a new addition

Read more »