Pharos Energy Falls To UK£0.19, But Insiders Sold At Lower Price

Despite the fact that Pharos Energy plc's (LON:PHAR) value has dropped 13% in the last week insiders who sold US$108k worth of stock in the past 12 months have had less success. The average selling price of US$0.23 is still lower than the current share price, or in other words, insiders would have been better off holding on to their shares.

While we would never suggest that investors should base their decisions solely on what the directors of a company have been doing, we do think it is perfectly logical to keep tabs on what insiders are doing.

The Last 12 Months Of Insider Transactions At Pharos Energy

In the last twelve months, the biggest single sale by an insider was when the CFO & Director, Susan Rivett, sold UK£108k worth of shares at a price of UK£0.23 per share. We generally don't like to see insider selling, but the lower the sale price, the more it concerns us. The good news is that this large sale was at well above current price of UK£0.19. So it is hard to draw any strong conclusion from it. The only individual insider seller over the last year was Susan Rivett.

Over the last year, we can see that insiders have bought 143.75k shares worth UK£34k. On the other hand they divested 479.60k shares, for UK£108k. The chart below shows insider transactions (by companies and individuals) over the last year. By clicking on the graph below, you can see the precise details of each insider transaction!

Check out our latest analysis for Pharos Energy

For those who like to find hidden gems this free list of small cap companies with recent insider purchasing, could be just the ticket.

Are Pharos Energy Insiders Buying Or Selling?

We saw some Pharos Energy insider buying shares in the last three months. Insiders purchased UK£7.3k worth of shares in that period. It's great to see that insiders are only buying, not selling. However, in this case the amount invested recently is quite small.

Insider Ownership Of Pharos Energy

Another way to test the alignment between the leaders of a company and other shareholders is to look at how many shares they own. I reckon it's a good sign if insiders own a significant number of shares in the company. Pharos Energy insiders own about UK£34m worth of shares (which is 44% of the company). Most shareholders would be happy to see this sort of insider ownership, since it suggests that management incentives are well aligned with other shareholders.

So What Does This Data Suggest About Pharos Energy Insiders?

Insider purchases may have been minimal, in the last three months, but there was no selling at all. Overall the buying isn't worth writing home about. While we gain confidence from high insider ownership of Pharos Energy, we can't say the same about their transactions in the last year, in the absence of further purchases. So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. To that end, you should learn about the 3 warning signs we've spotted with Pharos Energy (including 1 which makes us a bit uncomfortable).

But note: Pharos Energy 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 of direct interests only, but not derivative transactions or indirect interests.

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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.