EOG Resources, insider trading: Yesterday, Tuesday Oct. 8th, two insiders from EOG Resources Inc (NYSE:EOG) filed a Form 4 Statement with the SEC, declaring that they had acquired stock from the company last Friday, Oct. 4th. The insiders are Jr W Lloyd Helms, Excutive Vice President at the Exploration & Production segment, and L Gary Thomas, CEO. They bought 1.454 and 8.537 shares, respectively, at a price of $174.59 (both).
Although the purchases are small, they are relevant in one particular sense: they come to reverse a trend. Over the last month, both of them had sold considerable amounts of stock. However, prices escalated considerably since their sales.
After the reported transaction, Helms owns about $5,795,315 worth in stock. Thomas holds an even bigger stake, worth $84,562,033. In addition to these two insiders, several of the hedge funds that we track hold big stakes in EOG. Ken Griffin's Citadel Investment Group holds about $280,059,000 worth in stock; Ric Dillon's Diamond Hill Capital, roughly $209,206,000; and Steven Cohen's SAC Capital, $183,552,000. In addition to these hedgies, another 54 funds that we track are betting on this oil and gas company with more than $46 billion in market capitalization.
The purchases were surrounded by several buy recommendations and upgrades (e.g. from Deutsche Bank, which increased its target price from $173 to $176 per share). On the day of the purchase and Deutsche Bank’s upgrade, the stock was up 1.6%. However, in the days that followed, it fell 1.3%, losing most of the ground won.
But, trading at more than 46 times its earnings, very close to its 52-week high of $174.86, what led insiders to buy?
Well, the fact is that one needs to look beyond the P/E ratio when investing in the E&P sector. Taking a closer look at other figures like net income growth, cash flow increases, and growth prospects, one can discover that EOG’s stock is cheaper than it may seem. One month away from the next earnings call, maybe it’s time to buy before the price continues to surge.
Disclosure: Javier Hasse holds no position in any stocks mentioned