Eye-Catching Insider Buying Witnessed at Tempur Sealy (TPX) and 2 Other Companies

Energy Recovery Inc. (NASDAQ:ERII) had a member of its Board of Directors buy a sizable block of shares last week. Robert Yu Lang Mao, who joined Energy Recovery’s Board in September 2010, purchased 40,000 shares on Friday at prices ranging between $9.34 and $9.49 per share, increasing his direct ownership stake to 97,361 shares. It should be mentioned that the company also had three different Directors unload sizable blocks of shares last week. So why did the aforementioned Director purchase more shares, after the stock has already skyrocketed by 193% over the past 12 months.

The shares of the energy solutions provider to industrial fluid flow markets skyrocketed in October 2015 following the announcement of a 15-year agreement with oilfield company Schlumberger Limited. (NYSE:SLB) to commercialize Energy Recovery’s VorTeq hydraulic pumping system. The VorTeq is an enabling technology for oilfield companies to isolate and preserve hydraulic fracturing pumps by redirecting hostile fracturing fluids away from these critical pumps. As a result, this technology can lower repair and maintenance costs and lead to higher fleet revenue. Some analysts believe that the aforementioned deal is transformative for Energy Recovery, mainly because the deal validates the product, currently in the research and development stage, and boosts the odds of its successful commercialization. The highly-successful agreement involves $125 million in payments to be paid in stages: $75 million upfront, which are amortized over the 15-year agreement period, two separate $25 million payments associated with achieving two milestones, as well as recurring royalty payments as soon as the product starts its commercialization.

The hedge fund sentiment towards Energy Recovery increased significantly in the fourth quarter, as the number of money managers bullish on the stock climbed to 12 from 4 quarter-over-quarter. Brandon Osten’s Venator Capital Management added a 469,592-share position in Energy Recovery Inc. (NASDAQ:ERII) to its portfolio during the December quarter.

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