It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So we'll take a look at whether insiders have been buying or selling shares in Power Metal Resources plc (LON:POW).

What Is Insider Buying?

Most investors know that it is quite permissible for company leaders, such as directors of the board, to buy and sell stock in the company. However, rules govern insider transactions, and certain disclosures are required.

We don't think shareholders should simply follow insider transactions. But it is perfectly logical to keep tabs on what insiders are doing. As Peter Lynch said, 'insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.

See our latest analysis for Power Metal Resources

The Last 12 Months Of Insider Transactions At Power Metal Resources

Notably, that recent purchase by Paul Johnson is the biggest insider purchase of Power Metal Resources shares that we've seen in the last year. That means that even when the share price was higher than UK£0.004 (the recent price), an insider wanted to purchase shares. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. It is generally more encouraging if they paid above the current price, as it suggests they saw value, even at higher levels.

Power Metal Resources insiders may have bought shares in the last year, but they didn't sell any. The average buy price was around UK£0.074. These transactions suggest that insiders have considered the current price attractive. The chart below shows insider transactions (by individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

Power Metal Resources is not the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Insiders at Power Metal Resources Have Bought Stock Recently

It's good to see that Power Metal Resources insiders have made notable investments in the company's shares. CEO & Executive Director Paul Johnson spent UK£854k on stock, and there wasn't any selling. This could be interpreted as suggesting a positive outlook.

Insider Ownership of Power Metal Resources

Many investors like to check how much of a company is owned by insiders. 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 9.2% of the company, worth about UK£204k. But they may have an indirect interest through a corporate structure that we haven't picked up on. We do generally prefer see higher levels of insider ownership.