3 Oil & Gas Stocks That Insiders Love

Tracking insider purchases is very important to our investment strategy. This is why, in this article, I will look into three companies in the Oil & Gas industry group, which have seen insiders buy their stock over the past couple of days.

The first company I would like to refer to is Stone Energy Corporation (NYSE:SGY), a $1.7 billion market cap independent oil and natural gas company engaged in the acquisition, exploration, exploitation, development and operation of oil and gas properties. On March 11th, Phyllis Taylor, a Board Director, purchased 7,000 shares of the company for $34.51 per share. He now owns 37,195 shares of the company, worth almost $1.3 million.

Stone Energy Corporation (NYSE:SGY)

This company boasts above average margins and returns. Its return on equity of 12.8% is, in fact, amongst the highest in its industry. This, added to a cheap valuation, at 14 times the company’s earnings, versus an industry mean of 33.4 x P/E, makes Mr. Phyllis’ purchase understandable. Moreover, a consensus median price target of $42 per share provides plenty of upside potential for the stock.

Hedge funds seem to notice this potential too. Several prominent investors including Ken Griffin, Israel Englander and Chuck Royce hold million dollar stakes in the stock. However, poor long term growth projections and high debt levels make us feel slightly unsure about this investment option.

Second on my list is MPLX LP(NYSE:MPLX), a $3.6 billion market cap limited partnership recently formed by Marathon Petroleum Corporation (NYSE:MPC) that owns, operates, develops and acquires crude oil, refined product and other hydrocarbon-based product pipelines and other midstream assets. Also on March 11th, an insider acquired stock from the company: Richard C. Wilson, a Board Director, purchased 3,000 shares of the company at an average price of $49.42 per share. Following the reported transaction, the insider held 8,565 shares of the company valued at more than $400,000.

Once again, wide margins and decent returns, coupled with a cheap valuation (12.9 x P/E, compared to the 37.9 x industry average), make this stock an attractive investment option and Mr. Wilson’s purchase a comprehensible one. Furthermore, long-term EPS growth projections that is double its peers’ mean and a 2.5% dividend yield make it a great option for patient investors. Jim Simons and Russell Lucas seem willing to wait; they hold stakes worth approximately $1 million, combined.

Another interesting case is that of Midcoast Energy Partners LP (NYSE:MEP), a natural gas services provider with a market cap slightly under $1 billion. On March 11th, Gregory C Harper, Principal Executive Officer, bought 2,350 Class A Common Units of the company for $20.30 each. Mr. Harper had initiated a stake in the company only four days earlier; on March 7th, through several acquisitions, he had procured 2,590 shares of Midcoast Energy Partners at prices ranging from $20.17 to $20.19 per share. The insider now owns 4,940 shares of the company.

In this case, Mr. Harper’s bet must seems to have been placed on growth potential and a 3.2% dividend yield, since the company’s margins and returns are razor-thin. Nonetheless, the stock looks like a suitable (and cheap) option for long-term investors. We should highlight, however, that none of the major hedge funds that we track hold long positions in this stock.

 

Disclosure: Javier Hasse holds no position in any stocks mentioned

Recommended reading:

Elliott Management Backs Its Intention to Take Over Riverbed Technology, Inc. (RVBD); Boosts Stake in Juniper Networks, Inc. (JNPR)

Clinton Group Cuts Stake in The Wet Seal, Inc. (WTSL)

Deerfield Management Boosts Its Stake in OvaScience Inc (OVAS)

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!