As Pathfinder Resources Ltd (ASX:PF1) hits AU$20m market cap, insiders may be dismayed about not purchasing higher quantities

By
Simply Wall St
Published
September 07, 2021
ASX:PF1
Source: Shutterstock

Last week, Pathfinder Resources Ltd (ASX:PF1) insiders, who had purchased shares in the previous 12 months were rewarded handsomely. The shares increased by 21% last week, resulting in a AU$3.5m increase in the company's market worth. In other words, the original AU$353k purchase is now worth AU$611k.

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.

See our latest analysis for Pathfinder Resources

Pathfinder Resources Insider Transactions Over The Last Year

The Non-Executive Chairman Sufian Ahmad made the biggest insider purchase in the last 12 months. That single transaction was for AU$90k worth of shares at a price of AU$0.18 each. Although we like to see insider buying, we note that this large purchase was at significantly below the recent price of AU$0.34. While it does suggest insiders consider the stock undervalued at lower prices, this transaction doesn't tell us much about what they think of current prices.

Sufian Ahmad bought a total of 1.80m shares over the year at an average price of AU$0.20. 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!

insider-trading-volume
ASX:PF1 Insider Trading Volume September 7th 2021

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Does Pathfinder Resources Boast High Insider Ownership?

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. We usually like to see fairly high levels of insider ownership. Insiders own 21% of Pathfinder Resources shares, worth about AU$4.1m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

So What Do The Pathfinder Resources Insider Transactions Indicate?

We note a that there has been a bit of insider buying recently (but no selling). That said, the purchases were not large. On a brighter note, the transactions over the last year are encouraging. Insiders own shares in Pathfinder Resources and we see no evidence to suggest they are worried about the future. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Pathfinder Resources. For instance, we've identified 3 warning signs for Pathfinder Resources (2 are potentially serious) you should be aware of.

But note: Pathfinder Resources may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

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.

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