On September 13, 2023, Boaz Energy II, LLC, a 10% owner of PermRock Royalty Trust (PRT, Financial), sold 3,160 shares of the company. This move is part of a larger trend for the insider, who over the past year has sold a total of 640,581 shares and purchased none.
Boaz Energy II, LLC is a private equity firm specializing in investments in the energy sector. The firm primarily invests in oil and gas properties and is known for its strategic and operational expertise in the industry. As a 10% owner of PermRock Royalty Trust, Boaz Energy II, LLC holds a significant stake in the company's performance and future.
PermRock Royalty Trust is a Delaware statutory trust formed by Boaz Energy II, LLC. The Trust's primary business activity is to own and manage net profit interests in the oil and natural gas production from certain properties in the states of Texas, Louisiana and New Mexico. As of the end of 2023, these properties had a total of 22.7 million barrels of oil equivalent of proved developed reserves.
The insider's recent sell-off raises questions about the company's current valuation and future prospects. To better understand this, let's take a closer look at the company's insider trading history and valuation metrics.
The insider transaction history for PermRock Royalty Trust shows a clear trend of selling. Over the past year, there have been 64 insider sells and no insider buys. This could indicate that insiders believe the stock is currently overvalued or that they expect the company's performance to decline in the future.
On the day of the insider's recent sell, shares of PermRock Royalty Trust were trading for $6.41, giving the company a market cap of $78.836 million. This is significantly lower than the industry median, suggesting that the stock may be undervalued.
However, the company's price-to-GF-Value ratio of 0.69 suggests that the stock may be a possible value trap. The GF Value, an intrinsic value estimate developed by GuruFocus, is calculated based on historical multiples, a GuruFocus adjustment factor, and future estimates of business performance. With a GF Value of $9.26, the stock appears to be undervalued, but investors should think twice before buying due to the potential risk of a value trap.
In conclusion, the recent sell-off by Boaz Energy II, LLC, coupled with the company's valuation metrics, suggests that investors should approach PermRock Royalty Trust with caution. While the stock appears to be undervalued, the lack of insider buying and the potential risk of a value trap indicate that there may be underlying issues that could impact the company's future performance.
