Will Insiders Be Tempted To Buy More HERO At The New 52-Week Low?

By TheOnlineInvestor.com,

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In trading on Monday, shares of Hercules Offshore Inc (Symbol: HERO) touched a new 52-week low of $4.27/share. That's a $3.69 share price drop, or -46.36% decline from the 52-week high of $7.96 set back on 07/23/2013. Large percentage drops always require that the stock post even larger percentage gains from the low in order to recover the old price point, and for HERO that means the stock would have to gain 86.42% to get back to the 52-week high. For a move like that, Hercules Offshore Inc would need fundamental strength at the business level.

Here's a rhetorical question: Who knows more about fundamentals at the business level than the company's own insiders? So let's take a look to see whether any company insiders were taking the other side of the trade as HERO shares were being sold down to this new 52-week low, focusing on the most recent trailing six month period. As summarized by the table below, HERO has seen 2 different instances of insiders buying over the past six months.

Purchased Insider Title Shares Price/Share Value
11/06/2013 Steven A. Webster Director 100,000 $6.58 $658,410.00
02/10/2014 Thomas R. Bates Jr. Director 25,000 $4.52 $113,042.50
02/14/2014 Steven A. Webster Director 50,000 $4.59 $229,462.50
03/31/2014 Steven A. Webster Director 50,000 $4.56 $227,955.00

In the short run, while the new 52-week low suggests the stock is at the cheapest price and perhaps therefore the best bargain it has been over the last 52 weeks, the low print also means anyone who has purchased the stock over that timeframe is staring at an unrealized loss. Oftentimes, that factor drives a stock's technical analysis metrics by creating overhead resistance, with investors who bought higher now anxious to reverse their trade once they are back to breakeven. The chart below shows where HERO has traded over the past year, with the 50-day and 200-day moving averages included.

Hercules Offshore Inc Moving Averages Chart

Time will tell whether the insider purchases foretell a future rebound for HERO shares, which are presently showing a last trade of $4.39/share, slightly above the new 52-week low.

Ten Bargains You Can Buy Cheaper Than The Insiders Did »

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Investing Ideas
Referenced Stocks: HERO

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