This Board Member Is In For $130,000

Carin Barth, who was appointed to the Board of Directors of Bill Barrett Corporation (NYSE:BBG) earlier this year, purchased 5,000 shares of the company on September 14th at an average price of $26.59, according to a filing with the SEC. Bill Barrett is a Colorado-based exploration and production oil and gas company operating in the Rocky Mountains, including the emerging unconventional play in the Denver-Julesburg basin. Barth also serves on the board of oil and gas refiner Western Refining, Inc. (NYSE:WNR) and has experience at energy-focused investment firm LB Capital as well.

Bill Barrett Corporation (NYSE:BBG)

There was a good deal of insider buying at Bill Barrett Corporation this past May and June, at average prices ranging from $15.77 to $21.54 per share; note that the stock is considerably up from these insider purchases (see a history of insider purchases at Bill Barrett). This isn’t much of a surprise: statistically, insider buying tends to be a bullish signal (read our analysis of academic research on insider trading). In theory, this is because insiders should be reluctant to invest additional money in the company they work for and prefer to diversify their investments. So when they do invest in the company, it indicates strong confidence in the stock.

Despite its gains since the round of insider buying earlier this year, Bill Barrett is actually down 40% from its price of about $45 a year ago, and down 26% for 2012. It’s easy to see why the stock plunged going by the company’s most recent quarter: revenue fell 19% and operating expenses rose, bringing net income down to $3 million compared to $33 million in the second quarter of 2011. The first quarter of the year was better than a year earlier, but Bill Barrett still showed an 8% drop in revenue and an 18% drop in net income for the first half of 2012. Production of oil and natural gas was up, but were countered by falling natural gas prices. The company continues to bet on its development program, with $460 million in additions to oil and gas properties in the first six months of the year. Given the company’s market capitalization of $1.3 billion, this is a very aggressive move.

Bill Barrett Corporation now trades at 57 times trailing earnings and 32 times forward earnings estimates as investors expect the company to rebound. A recovery to pull the company’s fundamentals even with its stock price likely depends on higher energy prices, especially natural gas, which is not a sure bet given the frenzy of drilling activity in the onshore U.S. Bill Barrett could get some gains out of flat prices if production volumes rise, but we doubt that would be enough to justify the current stock price.

Plains Exploration & Production Company (NYSE:PXP), Occidental Petroleum Corporation (NYSE:OXY), and Anadarko Petroleum Corporation (NYSE:APC) are three peer companies engaged in oil and gas exploration and production, with sizable positions in the onshore U.S. These comparable companies all trade at forward earnings multiples considerably lower than Bill Barrett’s: between 12 (for Occidental) and 17 (for Anadarko). Occidental is also priced for value on a trailing basis, with a price-to-earnings ratio of 12; however, it saw a 7% drop in revenue and 27% fall in earnings last quarter compared to the same period last year. Plains has delivered growth- it saw a 79% rise in earnings compared to the second quarter of 2011- but the market has captured much of that in its trailing P/E of 36. Anadarko is the most expensive of the three on a forward basis, but even this value is considerably lower than Bill Barrett’s forward P/E; Anadarko also leads our list of the ten energy stocks hedge funds are crazy about. We think that investors should consider these companies instead of Bill Barrett if they want natural gas exposure. For value, pick Occidental; for growth, pick Plains; to follow in the footsteps of notable investors, pick Anadarko.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

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!