Insider Weekends: Jack Hightower Purchases Nearly $2 Million Of HighPeak Energy

Welcome to edition 563 of Insider Weekends. Insider buying decreased significantly last week with insiders purchasing $44.09  million of stock purchased compared to $116.21 million in the week prior. Selling also decreased with insiders selling $1.98 billion of stock last week compared to $2.49 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 went up to 44.99. In other words, insiders sold 45 times as much stock as they purchased. The Sell/Buy ratio this week compares unfavorably with the prior week, when the ratio stood at an unusually high 21.41.

Insider Sector Heat Map April 9, 2021

Insider Sector Heat Map April 9, 2021

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. HighPeak Energy, Inc. (HPK): $7.2

Chief Executive Officer Jack Hightower acquired 276,223 shares of this independent oil and natural gas company, paying $6.62 per share for a total amount of $1.83 million.

HighPeak has experienced a lot of volatility during its short existence as a public company. The stock started dropping sharply shortly after its merger with the SPAC Pure Acquisition Corp. was consummated last August. It hit a bottom in October 2020 in the low $4s before a massive rally saw the stock peak in the high $19s less than two months later. This volatility had little to do with big price swings we saw in WTI crude last year.

HighPeak Energy One Year Stock Chart

HighPeak Energy One Year Stock Chart

The stock was trading at $6.65 before this insider purchase was filed with the SEC and the stock immediately shot up 18.65% the next day before giving back some of those gains. All this volatility probably has to do with the SPAC bubble and its subsequent deflation we experienced over the last few months. It does not help that HighPeak Energy is such a young company and expects to generate negative cumulative cash flows in 2021 and 2022 as it invests in its growth according to its investor presentation from May 2020.

The good news is that the rally in crude oil from its lows last year has helped the company perform better than its own models from last year. Last year we wrote about the insiders of several companies in the energy sector buying their own shares and briefly wrote about the large purchase of Continental Resources (CLR) by its Executive Chairman Harold Hamm. I expanded on the opportunity with Continental Resources in our August 2020 newsletter and added the stock to our model portfolio. The stock has generated gains in excess of 47% since then. The bet was mostly based on a recovery in oil prices and Continental Resources positioned as a low cost producer to benefit from increase in prices. I wrote the following in that newsletter,

“I have also seen Chairmen of commodity companies that have a long history with the company and have experienced several economic cycles make some astute purchases. These purchases may not play out in the course of a few weeks or even months but do play out over a longer horizon. One such example was the purchases of Southern Copper (SCCO) by its Chairman Germán Larrea Mota-Velasco in 2015 at prices in the mid $20s. Copper bottomed in early 2016 and then went up more than 70% in the next two years. Southern Copper now trades at $43.71 per share.”

Like Continental Resources, HighPeak Energy also prides itself on its low cost of production and efficient operations, yielding the best margins among its peers operating in the Permian basin. A bet on HighPeak Energy at this point is a bet on its CEO Mr. Hightower who according to the company, was the “former CEO of two public businesses, Titan Exploration & Pure Resources, that generated >6.0x ROI to investors” and “partnered with private equity on 4 businesses, generating average returns of over 5.0x ROI and 100% IRR to investors”. 

HighPeak Operating Margin

HighPeak Energy Operating Margin (source: HighPeak Energy May 2020 Investor Presentation)

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

P/E: N/A Forward P/E: N/A Industry P/E: N/A
P/S: 27.1 Price/Book: N/A EV/EBITDA: -81.8
Market Cap: $667.27M Avg. Daily Volume: 156,217 52 Week Range: $4.2 – $21.82

2. William Penn Bancorporation (WMPN): $11.4

EVP & CLO Alan B. Turner acquired 11,000 shares of this regional bank, paying $11.39 per share for a total amount of $125,289.

1,000 of these shares were purchased indirectly through a benefit plan set up for Mr. Turner’s spouse.

You can view the list of recent insider transactions for William Penn Bancorporation here.

P/E: 100.89 Forward P/E: N/A Industry P/E: 12.80
P/S: 3.5 Price/Book: 1.72 EV/EBITDA: N/A
Market Cap: $70.78M Avg. Daily Volume: 76,670 52 Week Range: $11.25 – $39

3. Bioventus Inc. (BVS): $13.75

SVP & General Counsel Gregory O. Anglum acquired 6,000 shares of this medical device company, paying $13.00 per share for a total amount of $78,000.

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

P/E: N/A Forward P/E: N/A Industry P/E: N/A
P/S: 2.43 Price/Book: N/A EV/EBITDA: 19.82
Market Cap: $781.35M Avg. Daily Volume: 383,662 52 Week Range: $10.74 – $19.51

4. Athenex, Inc. (ATNX): $4.1

Director Kim Campbell acquired 8,250 shares of this biopharmaceutical company, paying $4.42 per share for a total amount of $36,465.

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

P/E: N/A Forward P/E: -3.33 Industry P/E: N/A
P/S: 2.65 Price/Book: 2.13 EV/EBITDA: -2.67
Market Cap: $383.16M Avg. Daily Volume: 3,020,653 52 Week Range: $3.93 – $15.24

5. Sensei Biotherapeutics, Inc. (SNSE): $14.13

Director James Peyer acquired 2,000 shares of this biotech company, paying $14.00 per share for a total amount of $28,000. These shares were purchased indirectly by Cambrian Biopharma Inc.

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

P/E: N/A Forward P/E: N/A Industry P/E: N/A
P/S: N/A Price/Book: N/A EV/EBITDA: -27.5
Market Cap: $432.22M Avg. Daily Volume: 321,113 52 Week Range: $11.75 – $26.5

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

Notable Insider Sales:

1. Facebook, Inc. (FB): $312.46

Shares of Facebook were sold by 2 insiders:

  • COB and CEO Mark Zuckerberg sold 262,973 shares for $306.39, generating $80.57 million from the sale. These shares were sold indirectly by various entities.
  • Chief Accounting Officer Susan J.S. Taylor sold 3,147 shares for $300.00, generating $944,100 from the sale.

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

P/E: 30.97 Forward P/E: 23.09 Industry P/E: 43.60
P/S: 10.35 Price/Book: 6.94 EV/EBITDA: 21.22
Market Cap: $889.78B Avg. Daily Volume: 21,068,833 52 Week Range: $168.34 – $315.88

2. Ulta Beauty, Inc. (ULTA): $322.22

Shares of this beauty retailer were sold by 2 insiders:

  • Director Charles Heilbronn sold 155,093 shares for $317.35, generating $49.22 million from the sale. These shares were sold indirectly by Mousseluxe SARL.
  • Director Lorna Nagler sold 4,666 shares for $317.74, generating $1.48 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.

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

P/E: 103.61 Forward P/E: 26.83 Industry P/E: 38.33
P/S: 2.94 Price/Book: 9.07 EV/EBITDA: 27.07
Market Cap: $18.11B Avg. Daily Volume: 820,666 52 Week Range: $186.01 – $351

3. Guardant Health, Inc. (GH): $157.17

Chief Executive Officer Helmy Eltoukhy sold 220,685 shares of this precision oncology company for $159.33, generating $35.16 million from the sale.

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

P/E: N/A Forward P/E: -54.57 Industry P/E: N/A
P/S: 55.05 Price/Book: 12.13 EV/EBITDA: -65.02
Market Cap: $15.78B Avg. Daily Volume: 1,054,069 52 Week Range: $64.35 – $181.07

4. Applied Materials, Inc. (AMAT): $138.91

Shares of this semiconductor company were sold by 3 insiders:

  • President and CEO Gary E. Dickerson sold 105,184 shares for $140.00, generating $14.73 million from the sale.
  • SVP, Semi. Products Group Prabu G. Raja sold 50,000 shares for $140.95, generating $7.05 million from the sale.
  • SVP, Engineer., Ops. & Quality Ginetto Addiego sold 30,000 shares for $140.12, generating $4.2 million from the sale.

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

P/E: 33.22 Forward P/E: 20.89 Industry P/E: 36.58
P/S: 7 Price/Book: 11.11 EV/EBITDA: 24.11
Market Cap: $127.47B Avg. Daily Volume: 9,711,951 52 Week Range: $46.22 – $146

5. Zai Lab Limited (ZLAB): $132.63

Chairwoman & CEO Ying Du sold 111,112 shares of this biotech company for $128.19, generating $14.24 million from the sale.

You can view the list of recent insider transactions for Zai Lab Limited here.

P/E: N/A Forward P/E: -53.91 Industry P/E: N/A
P/S: 238.96 Price/Book: 9.96 EV/EBITDA: -35.61
Market Cap: $11.7B Avg. Daily Volume: 425,877 52 Week Range: $57.13 – $193.54

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: 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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