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Syrah Resources Ltd (ASX:SYR) share price storms higher on insider buying news

On Thursday the Syrah Resources Ltd (ASX: SYR) share price was amongst the best performers on the Australian share market

The graphite producer’s shares finished the day higher by a sizeable 7.5% at $1.72.

Why are Syrah’s shares storming higher today?

A number of battery material shares such as Galaxy Resources Limited (ASX: GXY), Kidman Resources Ltd (ASX: KDR), and Orocobre Limited (ASX: ORE) rose strongly on Thursday along with Syrah, possibly due to investors developing an appetite for risk again after global financial markets stabilised.

Some of these shares were among the worst performers in October, falling heavily as investors reduced their exposure to risky assets.

This certainly was the case for Syrah. Its shares shed 31% of their value last month, stretching their year to date decline to a massive 66%.

As well as investors going into risk off mode, some of its most recent declines have been driven by a series of issues at its Balama project in Mozambique that have led to reductions in its production guidance and the loss of credibility with investors.

In addition to this, the lower levels of production ultimately led to management having to push back its positive cash flow target to the first quarter of 2019, rather than late 2018 as previously flagged.

Should you invest?

While I’m not prepared to make an investment just yet and would like to see a big improvement in its operational performance first, others see this as a buying opportunity.

According to a change of director’s interest notice, one of Syrah’s independent non-executive directors has been buying shares this week.

The notice reveals that Lisa Bahash picked up 15,583 shares through an on-market trade on Wednesday. Bahash paid an average of $1.595 per share, equating to a total consideration of $24,855.

It appears that this director believes that Syrah is over the worst of its issues now, but time will tell if that is the case.

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Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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