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Premium Post: Cluster Of Insider Purchases In The Energy Industry

  • December 12, 2019
The energy industry is broadly divided into three components consisting of upstream companies that do the exploration and production of oil and natural gas, the midstream companies that transport and store the extracted hydrocarbons and the downstream companies that refine, process and sell the end products like gasoline. There is often significant overlap between these components and there are several energy companies that do all three. Energy Sector Components (source: ALPS Funds) Over the last several weeks we have seen very consistent insider buying by insiders of midstream energy companies. Most of these purchases have been by insiders that have been with their companies for decades or were founders of those companies. What is remarkable is not just the size of the purchases but also the frequency of these purchases. Insiders are often early when buying shares and are usually very optimistic about the prospects of their companies even if that optimism is unwarranted. A group of purchases across multiple companies in a sector appears to be a stronger signal than a cluster of purchases inside a single company. What we are seeing now reminds me of a cluster of purchases across companies when the for-profit...

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