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Jun 03, 2023

Power Metal Resources Insider Confidence Rewarded, Stock Hits UK£17m Market Cap

Stock Analysis Power Metal Resources plc (LON:POW) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 17%, resulting in a UK£2.5m rise in the company's

Stock Analysis

Power Metal Resources plc (LON:POW) insiders who bought shares over the past year were rewarded handsomely last week. The stock rose 17%, resulting in a UK£2.5m rise in the company's market capitalisation. In other words, the original UK£46k purchase is now worth UK£57k.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

Check out our latest analysis for Power Metal Resources

The Non-Executive Director Edmund Charles Shaw made the biggest insider purchase in the last 12 months. That single transaction was for UK£46k worth of shares at a price of UK£0.0068 each. We do like to see buying, but this purchase was made at well below the current price of UK£0.0082. Because the shares were purchased at a lower price, this particular buy doesn't tell us much about how insiders feel about the current share price.

The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

Power Metal Resources is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.

In the last three months, Non-Executive Director Edmund Charles Shaw bought UK£46k. That's only a tiny bit more than the sales, worth UK£46k. Overall, we don't think these recent trades are particularly informative, one way or the other.

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. Our data indicates that Power Metal Resources insiders own about UK£1.9m worth of shares (which is 11% of the company). Overall, this level of ownership isn't that impressive, but it's certainly better than nothing!

We note that there's been a little more insider selling than buying, recently. But the difference is small, and thus, not concerning. On a brighter note, the transactions over the last year are encouraging. The transactions are fine but it'd be more encouraging if Power Metal Resources insiders bought more shares in the company. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Our analysis shows 7 warning signs for Power Metal Resources (2 are significant!) and we strongly recommend you look at them before investing.

Of course Power Metal Resources may not be the best stock to buy. So you may wish to see this free collection of high quality 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.

Find out whether Power Metal Resources is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.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.

Power Metal Resources plc, together with its subsidiaries, engages in the exploration and development of mineral properties in North America, Australia, and Africa.

Excellent balance sheet with weak fundamentals.