Since tracking insider trading can provide some interesting ideas and might also offer some investment opportunities, let’s take a look into two companies in the energy segment, which have seen insiders buy their stock over the past couple of days.
The first company I would like to refer to is Plains GP Holdings LP (NYSE:PAGP), a $3.7 billion market cap that, through its general partner Plains All American Pipeline, L.P.(NYSE:PAA), is engaged in the transportation, storage, terminalling and marketing of crude oil and refined products. The company was formed to pay dividends on behalf of an oil-and-gas partnership. It went public last October and managed to raise $3 billion in its debut.
On March 13th, Victor Burk, Board Director, purchased 3,000 shares of the company for prices ranging from $27.08 per share to $27.09 per share. These are the only holdings that the insider declared in the company, which are valued at approximately $84,000.
Although this company boasts below average margins and returns, and its stock trades at sky-high valuations in relation to the firm´s earnings and book-values, insiders, analysts, and even hedge funds seem to like this stock. Not only are analysts recommending this company, but also, prominent investors have taken big positions in it. For instance, Alec Litowitz and Ross Laser’s Magnetar Capital recently added this stock to its equity portfolio, and currently holds more than 3.5 million shares, worth more than $98 million. Other investment gurus with millionaire stakes in the company that are worth mentioning are Phill Gross, Robert Atchinson, Doug Silverman and Ken Griffin.
The other company in this list is a much smaller one (with a market cap that slightly surpasses $418 million): Swift Energy Company (NYSE:SFY). This Oil & Gas E&P company also witnessed an insider purchase on March 13th. Clyde Smith Jr., Board Director, purchased 15,000 shares of the company at an average price of $9.70 per share. Following the reported transaction, the insider held more than 71,000 shares of the company, valued at more than $681,600.
Once again, negative margins and returns make this stock slightly unattractive. However, the purchase can be understood when one looks at the stock’s valuation, at 0.7 times the company’s sales and 0.4 times its book values (versus respective industry averages of 2.6x and 1.8x). Moreover, decent long-term growth projections and a mean price target of $14.96 per share imply plenty of upside potential for investors. Furthermore, several prominent investors have increased their stakes in the company lately. These are the cases of Chuck Royce, who upped his bets on Swift Energy Company (NYSE:SFY) by 15% over Q4, to 1.26 million shares, and D E Shaw, who boosted his position by 1%, to 137,050 shares.
Disclosure: Javier Hasse holds no position in any stocks mentioned