One thing you may not know about Liontown shares

Here's an interesting – and potentially positive – fact.

| More on:
A lion leaps in front of a scenic backdrop.

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

Liontown Resources Ltd (ASX: LTR) shares may be catching investor attention for the company's lithium operations. But what you might not realise is just how much insiders have invested in the lithium miner.

Currently, insiders – meaning Liontown executives, board members and so on – hold a large chunk of the company's shares outstanding.

This level of insider ownership typically aligns management's interests with those of shareholders (why would they want to push the stock lower if they own it?) but is also a talking point for investors worldwide.

Let's take a deeper look.

Created with Highcharts 11.4.3Liontown Resources PriceZoom1M3M6MYTD1Y5Y10YALL1 Oct 20234 Oct 2024Zoom ▾Nov '23Jan '24Mar '24May '24Jul '24Sep '24Oct '23Oct '23Jan '24Jan '24Apr '24Apr '24Jul '24Jul '24www.fool.com.au

High insider ownership for Liontown shares

Insider ownership is often a strong indicator of a company's direction. When executives and directors own significant stakes in their company, it sends a message to investors.

For Liontown, the company's chair, Timothy Goyder, and its managing director and CEO, Tony Ottaviano, own roughly 15% of the company's stock.

According to filings in May this year, Goyder held more than 335.6 million Liontown shares via direct and indirect interests, including performance rights.

Ottaviano, meanwhile, held more than 9 million shares under the same stipulations, as shown in an August filing in which he offloaded more than 49,000 individual stock.

Together, both directors' interests total about 15% of the company's 2.43 billion shares outstanding.

This means key decision-makers are deeply invested in ensuring a favourable outcome for the company.

What about brokers?

Unlike the insiders above, brokers have mixed views on Liontown shares. According to Commsec, it is rated a hold by consensus.

But Bell Potter recently issued a speculative buy rating on Liontown shares with a price target of $1.85.

Bell Potter's note highlights that the company's Kathleen Valley project, with its long mine life and strategic location, could unlock shareholder value.

One of the major factors in the debate is the growth in spodumene production projected from the site. Even though prices have been low, high volume can make up for the shortfall in difficult commodity markets.

The broker suggests annual production could increase to 658 thousand tonnes per annum (ktpa), up from an estimated 511kpta this year.

With offtake contracts secured with top-tier electric vehicle and battery manufacturers, Bell Potter models Liontown to be "fully funded to free cash flow" in the very near future.

Foolish takeaway

The substantial insider ownership in Liontown is potential evidence management is confident in the company's future.

Their conviction must be high – Liontown shares are down 75% in the past year.

Motley Fool contributor Zach Bristow 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 Resources Shares

Three miners stand together at a mine site studying documents with equipment in the background
Resources Shares

Up 46% since June, should you still buy Pilbara Minerals shares right now?

A leading expert offers his verdict on Pilbara Minerals' resurgent share price.

Read more »

Female miner smiling at a mine site.
Resources Shares

Up 60% this year, this ASX 200 mining stock just smashed production records

Production surge headlines quarterly results.

Read more »

a man in a hard hat and high visibility vest smiles as he stands in the foreground of heavy mining equipment on a mine site.
Resources Shares

After lifting its price target, Macquarie now expects 36% upside from this ASX mining stock

The precious metals producer released better-than-expected production guidance.

Read more »

A miner in a hardhat and high visibility clothing makes a thumbs up symbol.
Resources Shares

4 reasons to buy Rio Tinto shares today

A leading expert forecasts strong growth potential for Rio Tinto shares.

Read more »

Man with rocket wings which have flames coming out of them.
Resources Shares

Why Macquarie expects this ASX All Ords copper stock could surge 38%

With costs coming in below expectations, this ASX All Ords copper stock could rocket higher over the coming months.

Read more »

Iron ore price Vale dam collapse ASX shares iron ore, iron ore australia, iron ore price, commodity price,
Resources Shares

Major miners up as China announces new mega project

Can a new mega-dam absorb iron ore oversupply?

Read more »

A young man sits at his desk with a laptop and documents with a gas heater visible behind him as though he is considering the information in front of him. about the BHP share price
Broker Notes

Leading broker has just downgraded BHP shares. Is it time to sell?

Macquarie sees little upside. But why?

Read more »

A young woman wearing a blue blouse with white polkadots holds her phone up with an intrigued and happy look on her face as she reads some news.
Resources Shares

3 reasons why the BHP share price could be a buy

Here are my optimistic thoughts on BHP.

Read more »