Insider Weekends: Another Purchase In The Energy Sector

Welcome to edition 527 of Insider Weekends. Insider buying decreased last week with insiders purchasing $88.83 million of stock compared to $99.17 million in the week prior. Selling also decreased with insiders selling $1 billion of stock last week compared to $1.29 billion in the week prior.

Sell/Buy Ratio: The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by total insider purchases that week. The adjusted ratio for last week dropped to 11.28. In other words, insiders sold more than 11 times as much stock as they purchased. The Sell/Buy ratio this week compares favorably with the prior week, when the ratio stood at 13.04.

Insider Sector Heat Map July 31, 2020

Insider Sector Heat Map July 31, 2020 (click to enlarge)

Note: As mentioned in the first post in this series, certain industries have their preferred metrics such as same store sales for retailers, funds from operations (FFO) for REITs and revenue per available room (RevPAR) for hotels that provide a better basis for comparison than simple valuation metrics. However metrics like Price/Earnings, Price/Sales and Enterprise Value/EBITDA included below should provide a good starting point for analyzing the majority of stocks.

Notable Insider Buys:

1. Kinder Morgan, Inc. (KMI): $14.1

Executive Chairman Richard D. Kinder acquired 300,000 shares of this oil & gas midstream company, paying $14.14 per share for a total amount of $4,241,610. Mr. Kinder increased his stake by 0.12% to 244,839,120 shares with this purchase.

When working through all the insider purchases for the month of July for our monthly newsletter for premium members, I was struck by the fact that three of the top 5 insider purchases in the month were in the energy sector. These three purchases were for an energy production company, an energy pipeline company (midstream) and for an energy services company. The following chart that I included in the August newsletter shows just how hard hit the energy sector has been this year.

CLR, XLE and SPY Year-To-Date Chart

CLR, XLE and SPY Year-To-Date Chart (source: Yahoo Finance)

The way I see it is that along the risk spectrum, the midstream companies that transport oil are the lowest risk of the group, followed by the energy exploration and production companies and finally the oil services companies. Obviously this assumes that the rebound in oil prices we have seen during the last three months is likely to continue and that economic activity will pick up significantly once this pandemic is over.

There are obviously unique situations that apply to each segment of the energy sector such as the news that a U.S. district court ruled that Energy Transfer LP’s Dakota Access pipeline will have to shut by Aug. 5 on account of environmental concerns. Shell Midstream Partners also indicated last week that it is experiencing a drop in volume on its pipelines.

There are opportunities in this hard hit sector but there are very good reasons for the sector’s current struggles. Being a tourist in this sector could easily get you burnt. I personally decided to add to my position in the midstream Alerian MLP ETF (AMLP) during the downturn in April and am now looking into an energy producer.

You can view the list of recent insider transactions for Kinder Morgan, Inc. here.

P/E: 198.59 Forward P/E: 15 Industry P/E: N/A
P/S: 2.61 Price/Book: 1 EV/EBITDA: 11.24
Market Cap: $31.92B Avg. Daily Volume: 13,232,415 52 Week Range: $9.42 – $22.58

2. Greenhill & Co., Inc. (GHL): $11.98

Chairman & CEO Scott L. Bok acquired 297,228 shares of this independent investment bank, paying $10.96 per share for a total amount of $3.23 million. These shares were purchased indirectly by Bok Family Partners L.P.

You can view the list of recent insider transactions for Greenhill & Co., Inc. here.

P/E: 15.64 Forward P/E: 11.86 Industry P/E: 18.31
P/S: 0.78 Price/Book: 22.31 EV/EBITDA: N/A
Market Cap: $225.02M Avg. Daily Volume: 178,253 52 Week Range: $7.28 – $23.08

3. AT&T Inc. (T): $29.58

Director Stephen J. Luczo acquired 100,000 shares of AT&T, paying $29.69 per share for a total amount of $2.97 million. These shares were purchased indirectly through a trust.

You can view the list of recent insider transactions for AT&T Inc. here.

P/E: 18 Forward P/E: 9.07 Industry P/E: N/A
P/S: 1.2 Price/Book: 1.2 EV/EBITDA: 7.81
Market Cap: $210.76B Avg. Daily Volume: 36,984,618 52 Week Range: $26.08 – $39.7

4. Acer Therapeutics Inc. (ACER): $3.73

Shares of this pharmaceutical company were acquired by 4 insiders:

  • President & CEO Chris Schelling acquired 142,857 shares, paying $3.50 per share for a total amount of $500,000. Mr. Schelling increased his stake by 8.16% to 1,892,857 shares with this purchase.
  • Director Steve Aselage acquired 45,000 shares, paying $3.50 per share for a total amount of $157,500. Mr. Aselage increased his stake by 238.03% to 63,905 shares with this purchase.
  • Director John Michael Dunn acquired 21,428 shares, paying $3.50 per share for a total amount of $74,998. Mr. Dunn increased his stake by 360.01% to 27,380 shares with this purchase.
  • Chief Legal Officer and Secretary Donald Joseph acquired 14,285 shares, paying $3.50 per share for a total amount of $49,998.

You can view the list of recent insider transactions for Acer Therapeutics Inc. here.

P/E: N/A Forward P/E: -3.11 Industry P/E: 32.45
P/S: N/A Price/Book: 2.67 EV/EBITDA: -1.35
Market Cap: $38.23M Avg. Daily Volume: 319,575 52 Week Range: $1.08 – $7.25

5. FB Financial Corporation (FBK): $25.41

Executive Chairman James W. Ayers acquired 27,250 shares of this regional bank, paying $25.07 per share for a total amount of $683,050. Mr. Ayers increased his stake by 0.20% to 13,609,910 shares with this purchase.

You can view the list of recent insider transactions for FB Financial Corporation here.

P/E: 11.76 Forward P/E: 11.39 Industry P/E: 10.49
P/S: 2.24 Price/Book: 1.01 EV/EBITDA: N/A
Market Cap: $815.69M Avg. Daily Volume: 149,782 52 Week Range: $14.38 – $40.33

You can view the full list of purchases from this Insider Buying page.

Notable Insider Sales:

1. Heartland Express, Inc. (HTLD): $20.285

Chief Executive Officer Michael J. Gerdin sold 3,260,870 shares of this trucking company for $20.02, generating $65.28 million from the sale. These shares were sold indirectly through a trust.

You can view the list of recent insider transactions for Heartland Express, Inc. here.

P/E: 25.26 Forward P/E: 20.49 Industry P/E: 66.65
P/S: 2.57 Price/Book: 2.35 EV/EBITDA: 9.04
Market Cap: $1.65B Avg. Daily Volume: 419,621 52 Week Range: $15.65 – $22.75

2. Medpace Holdings, Inc. (MEDP): $119.35

President & CEO August J. Troendle sold 399,702 shares of this clinical contract research organization for $121.90, generating $48.72 million from the sale. These shares were sold indirectly by Medpace Investors, LLC.

You can view the list of recent insider transactions for Medpace Holdings, Inc. here.

P/E: 42.19 Forward P/E: 27.31 Industry P/E: 47.64
P/S: 4.79 Price/Book: 5.69 EV/EBITDA: 27.58
Market Cap: $4.23B Avg. Daily Volume: 310,993 52 Week Range: $58.72 – $144.49

3. The Coca-Cola Company (KO): $47.24

Director David B. Weinberg sold 800,000 shares of Coca-Cola for $48.34, generating $38.67 million from the sale. These shares were sold indirectly through a trust.

You can view the list of recent insider transactions for The Coca-Cola Company here.

P/E: 22.28 Forward P/E: 22.93 Industry P/E: 29.24
P/S: 5.91 Price/Book: 11.6 EV/EBITDA: 21.08
Market Cap: $202.92B Avg. Daily Volume: 17,988,950 52 Week Range: $36.27 – $60.13

4. Align Technology, Inc. (ALGN): $293.82

Director Thomas M. Prescott sold 70,000 shares of this medical device company for $301.83, generating $21.13 million from the sale.

You can view the list of recent insider transactions for Align Technology, Inc. here.

P/E: 13.69 Forward P/E: 42.77 Industry P/E: 55.86
P/S: 10.71 Price/Book: 8.13 EV/EBITDA: 64.56
Market Cap: $23.14B Avg. Daily Volume: 1,006,251 52 Week Range: $127.88 – $326.36

5. Datadog, Inc. (DDOG): $93.86

Shares of this software application company were sold by 2 insiders:

  • Director Michael James Callahan sold 145,000 shares for $89.39, generating $12.96 million from the sale.
  • Chief Financial Officer David M. Obstler sold 35,000 shares for $89.66, generating $3.14 million from the sale.

You can view the list of recent insider transactions for Datadog, Inc. here.

P/E: N/A Forward P/E: -1564.33 Industry P/E: 54.16
P/S: 66.28 Price/Book: 35.34 EV/EBITDA: 4162.45
Market Cap: $28.1B Avg. Daily Volume: 5,032,834 52 Week Range: $27.55 – $98.99

You can view the full list of sales from this Insider Sales page.

The list of all insider purchases and sales by management people is only available to InsideArbitrage Premium members.

Disclaimer: I hold a long position in AMLP. Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.

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