Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

An Insider Put $380,000 On This Company

According to a filing with the SEC, Brady Parish Jr., Vice President of Investor Relations at Apache Corporation (NYSE:APA), directly acquired about 4,800 shares of the company’s stock on November 5th at an average price of $80.96 per share. We believe that insiders generally avoid investing in their own company, preferring instead to diversify their wealth away from the same economic forces that determine their income, unless they are highly confident in the stock’s future prospects. This is why we believe that studies have found that insider purchases tend to be bullish signs, more so than sales tend to be bullish (learn more about studies on insider trading).


With the $31 billion market cap Apache Corporation being one of the major players in U.S. onshore shale (as well as having offshore and global acreage), we think that it’s worth reviewing to see if investors should imitate this insider purchase. Apache reported a slight decline in revenue in the third quarter compared to the same period last year, though thanks to better H1 numbers sales were flat in the first nine months of the year versus the first nine months of 2011. However, the company’s depreciation expenses have picked up and combined with slightly higher operating expenses outside of depreciation this has pushed earnings down substantially. Earnings per share, with three-quarters of the year in the books, stood at $3.27- which, when annualized, implies a current-year P/E of 18. For a company with Apache’s growth prospects that’s not bad, though of course it is highly exposed to prices of natural gas and oil. It actually trades at only 8 times earnings estimates for 2013.

Boykin Curry IV’s Eagle Capital Management increased its stake in Apache Corporation during the second quarter of the year, with its 2.8 million shares representing a 34% increase from what it had reported at the end of the first quarter of 2012 (find more stocks that Eagle Capital Management was buying). Billionaire oilman T. Boone Pickens’ BP Capital initiated a position in Apache between April and June (see more stock picks from T. Boone Pickens).

We would compare Apache to fellow independent oil and gas companies EOG Resources, Inc. (NYSE:EOG), Devon Energy Corporation (NYSE:DVN), Continental Resources, Inc. (NYSE:CLR), and Anadarko Petroleum Corporation (NYSE:APC). Many of these companies also have a strong position in U.S. shale. There is a fairly wide spread among them in terms of forward earnings multiples: Continental and Anadarko’s forward P/Es are in the 16-17 range, while EOG is priced at 21 times 2013 estimates and Devon is the cheapest at 12x. Apache, then, is priced about in line with its peers. Of the four peers, the only one whose business has been prospering recently is Continental, whose exposure to the Bakken Shale has been sending both its revenue and earnings up; EOG and Devon, in their most recent quarterly reports, announced that earnings had fallen by at least 30% versus a year earlier. With EOG also being the highest multiple stock, we’d avoid that one; with Continental seemingly prospering thus far, it could be worth studying more closely. Devon is harder to judge- its revenue plummeted as well as its earnings, yet it trades at a discount on a forward earnings basis and that 2013 earnings number is in fact down from the company’s performance in the last four quarters. Anadarko- which edges EOG to have the largest market cap of these stocks- could also be worth taking a closer look at.

We’d hold off on Apache for now. If the industry is of interest, that stock does have this insider purchase in its corner but its business has not been performing well recently and perhaps one of its peers would serve as a good alternative.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

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 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!