Ferrellgas insider buying activity: Boyd Mcgathey, Executive VP & COO at Ferrellgas Partners (NYSE:FGP) purchased 1,000 shares of common stock at $22.16 each. His holdings now amount to 12,000 shares, or appoximately $266,640 (at $22,22 per share; as of Thursday, Oct. 3, 10:50 am EST). The stock now trades very close to its 52-week high of $23.74 per share. Ferrellgas is currently trading at 30.6 times its earnings, entailing a very high price premium relative to the industry average. The 9.05% dividend yield this stock has to offer, makes the high price premium more reasonable and might be the main reason Mcgathey increased his holdings by $22,160 on Thursday.
According to our records, Boyd Mcgathey has made four purchases of Ferrellgas stock over the past four months, in amounts of 1,000 shares each. During this period, prices climbed from $21.82 per share, to $22.22 (as of Thursday, Oct. 3, 10:50 am EST), representing an 18.3% increase in value since June 10th 2013.
Mcgathey’s purchase comes just a week after the firm announced its fourth quarter results, which saw margins improve, sales volumes increase and operations become increasingly efficient. With adjusted EBITDA climing 41% for 2013, the company reached a record of $272.2 million relative to the past year. And, with Distributable Cash Flow to equity investors almost doubling, cash distribution coverage reached 1.13x on all outstanding common units.
In a press release issued on September 26th, CEO Steve Wambold indicated, “We are proud to deliver these much improved, yet anticipated results to our investors with our fourth quarter performance marking our third record quarter in the last five.” In the fourth quarter, total revenues of $350.7 million were far beyond analyst estimates, which did not take rising propane sales into account.
As the quarterly results turned out better than expected, Mcgathey seems to have gained confidence in Ferrellgas’ future. Since his acquisition of 1,000 shares of common stock, the stock's price has increased by 0.27%.
Disclosure: Pablo Erbar holds no position in any stocks mentioned