Energy Sector Witnessing Massive Insider Buying; Are Insiders Betting on Rebound?

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Oneok Partners LP (NYSE:OKS) had two different insiders make purchases this week. Terry K. Spencer, Chief Executive Officer and President of the company’s general partner ONEOK Partners GP, reported buying a new stake of 20,700 shares on Wednesday at $28.9 apiece. Chairman of the Board for ONEOK Partners GP, John W. Gibson, snapped up 10,000 shares on the same day for $29.18 each, and currently holds 90,000 shares. This publicly-traded master limited partnership is engaged in oil and gas production, natural gas processing, gathering, storage and transmission. Its shares have declined by 26% since the beginning of the year and trade at a forward P/E ratio of 14.64. The company anticipates that its earnings for fiscal 2016 will increase relative to 2015 earnings, as a result of volume and fee-based margin increases. Even though the company has numerous fee-based businesses in its Natural Gas Liquids and Natural Gas Pipelines segments, Oneok Partners is still subject to the high risks associated with the commodity price environment (mainly in its Natural Gas Gathering and Processing segment). Nonetheless, Oneok Partners seems to be well-positioned to endure a sustained challenging environment and benefit from new opportunities along the way, mainly owing to its strong balance sheet and high liquidity. Israel Englander’s Millennium Management reported owning 297,395 shares of Oneok Partners LP (NYSE:OKS) through the latest round of 13Fs.

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Last but not least, AmeriGas Partners L.P. (NYSE:APU) is another company that has witnessed heavy insider buying activity over the past several weeks. Director Lon R. Greenberg acquired 5,000 shares on Monday at prices that ranged from $32.27-to-$32.34 per share, boosting his stake to 20,000 shares. Chief Financial Officer Hugh J. Gallagher purchased 4,200 shares last Monday at a price of $33.2 per share and currently owns 8,332 shares. AmeriGas Partners represents the largest retail propane distributor in the United States, and has seen its shares decline 26% this year. Nevertheless, the stock trades at a relatively cheap forward P/E ratio of 12.64, so the company’s stock performance can achieve a much-needed turnaround should analysts’ earnings estimates be accurate. The propane industry is currently experiencing record inventory levels and facing the lowest propane prices in the past decade or so. Moreover, retail propane industry volumes have been on a decline over the past several years and the growth prospects for the upcoming years do not look satisfactory either. The financial and stock performance of AmeriGas Partners throughout 2015 has also been impacted by warmer-than-normal weather. Specifically, average temperatures in fiscal 2015 (based on heating degree days) were warmer than normal by 5.8% and warmer than last year’s average temperatures by 8.9%. Jim Simons’ Renaissance Technologies owns nearly 226,000 shares of AmeriGas Partners L.P. (NYSE:APU) as of September 30.

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Disclosure: None

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