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.
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.
