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Generally, when a single insider buys stock, it is usually not a big deal. However, when several insiders are buying, like in the case of Power Metal Resources plc (LON:POW), it sends a favourable message to the company's shareholders.
While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.
Power Metal Resources Insider Transactions Over The Last Year
Notably, that recent sale by Non-Executive Director Edmund Charles Shaw was not the only time they traded Power Metal Resources shares this year. They previously purchased UK£82k worth of shares at a price of UK£0.021 per share. So it's clear an insider wanted to buy, at around the current price, which is UK£0.021. That means they have been optimistic about the company in the past, though they may have changed their mind. We do always like to see insider buying, but it is worth noting if those purchases were made at well below today's share price, as the discount to value may have narrowed with the rising price. The good news for Power Metal Resources share holders is that insiders were buying at near the current price. We note that Edmund Charles Shaw was also the biggest seller.
In the last twelve months insiders purchased 15.31m shares for UK£270k. On the other hand they divested 5.79m shares, for UK£107k. In total, Power Metal Resources insiders bought more than they sold over the last year. Their average price was about UK£0.018. It is certainly positive to see that insiders have invested their own money in the company. But we must note that the investments were made at well below today's share price. You can see a visual depiction of insider transactions (by companies and individuals) over the last 12 months, below. By clicking on the graph below, you can see the precise details of each insider transaction!
There are always plenty of stocks that insiders are buying. So if that suits your style you could check each stock one by one or you could take a look at this free list of companies. (Hint: insiders have been buying them).
Power Metal Resources Insiders Bought Stock Recently
Over the last three months, we've seen significantly more insider buying, than insider selling, at Power Metal Resources. In total, three insiders bought UK£134k worth of shares in that time. On the other hand, insiders netted UK£89k by selling. Insiders have spent more buying shares than they have selling, so on balance we think they are are probably optimistic.
Does Power Metal Resources Boast High Insider Ownership?
Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. From our data, it seems that Power Metal Resources insiders own 13% of the company, worth about UK£3.4m. However, it's possible that insiders might have an indirect interest through a more complex structure. Whilst better than nothing, we're not overly impressed by these holdings.
What Might The Insider Transactions At Power Metal Resources Tell Us?
We note a that there has been a bit of insider buying recently (but no selling). The net investment is not enough to encourage us much. However, our analysis of transactions over the last year is heartening. The transactions are fine but it'd be more encouraging if Power Metal Resources insiders bought more shares in the company. So while it's helpful to know what insiders are doing in terms of buying or selling, it's also helpful to know the risks that a particular company is facing. When we did our research, we found 3 warning signs for Power Metal Resources (2 make us uncomfortable!) that we believe deserve your full attention.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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