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4 Battered Companies Energy Insiders Are Buying


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" Insiders might sell their shares for any number of reasons, but they buy them for only one: They think the price will rise ."

- Peter Lynch, l egendary investment guru, in reference to insider buying

Not to be confused with 'insider trading,' which is illegal, insider buying is the purchase of a public company's shares by a person employed by the company.

Insider Buying in the Energy Industry

Everyone knows that oil prices are in freefall. In fact, it's been a harrowing 18 months for energy sector investors within almost every corner of this important area. The commodity is currently trading just above the key psychological level of $30-a-barrel after hitting a new 13-year low of $29.93 recently.

Oil is facing the heat on several fronts. Perhaps most important pertains to the weak Chinese economic data that has stoked fears about a slowdown in energy demand from the world's second largest oil consumer

What's more, in the absence of production cuts from OPEC and the resolve of North American shale suppliers to keep pumping despite crashing prices, along a still-weak European economy, not much upside is expected in oil prices in the near term. Moreover, a stronger dollar has made the greenback-priced crude more expensive for investors holding foreign currency. The Iranian nuclear framework agreement, which has the potential to release more of the commodity in the already oversupplied market, has put the final nail in the coffin.

Despite the crude slump and the bearish outlook, there has recently been some insider buying in the energy industry.

Is it a Positive Indicator?

With corporate insiders - executives, directors, or others associated with running the company - expected to possess a deeper understanding of the business fundamentals than anybody else, it surely is an indicator on which investors can rely.

Clearly insiders see their company's shares as a good investment, which would be able to weather the storm and be just fine. Moreover, with a number of energy firms trading at or close to their 52-week lows, insiders believe that the stock prices are really cheap and therefore a good bargain.

4 Energy Companies Witnessing Healthy Insider Buying

Let's check a few such companies that reported massive insider buying over the past few days.

Anadarko Petroleum Corp. APC : As Woodlands, TX-based oil and gas finder Anadarko Petroleum continued to drop to new lows, Peter J. Fluor - a Director - took advantage of the price dip to buy 25,000 shares last week. At $41.19 apiece, the consideration turns out to be around $1.03 million. The Zacks Rank #3 (Hold) company's shares were trading on Tuesday's close at $37.33. That is down from $77 this time last year.

Devon Energy Corp. DVN : This independent energy explorer had Director Barbara M. Baumann buying stock last week. She bought 8,200 shares of the company - holding a Zacks Rank #3 - at a price of $30.44 per share. The total for the buy came to $249,629. Devon Energy shares have dived around 56% over the past year, as the commodity downturn has taken a toll on the entire industry.  

Crestwood Equity Partners L.P. CEQP : 245,929 units of this midstream energy partnership have been scooped up by Director First Reserve Gp Xi. The units were added at an average price of $20.30 each, with a total consideration of almost $5 million. Carrying a Zacks Rank #2 (Buy), Crestwood had a rough 2015 on the stock markets and is down 75% in the past 12 months.

Enterprise Products Partners L.P. EPD : One of the biggest energy-related partnerships, it has not been spared the horrors of crude meltdown either as units are down 30% over the past year. The Houston-based Zacks Rank #3 firm saw a Director purchase 3.8 million units at $26.11 each, totaling about $100 million.

Bottom Line

Despite having a strong correlation with positive share movement, insider buying is not a guarantee for bullish stock performance. Nevertheless, it can be a strong endorsement of confidence in the future of the company that is currently undervalued or about to rebound.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ENTERPRISE PROD (EPD): Free Stock Analysis Report

DEVON ENERGY (DVN): Free Stock Analysis Report

ANADARKO PETROL (APC): Free Stock Analysis Report

CRESTWOOD EQTY (CEQP): Free Stock Analysis Report

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Zacks Investment Research

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: Business , Investing , Stocks
Referenced Symbols: EPD , DVN , APC , CEQP



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