Insider Buying Metric Points to Three Small-Cap Stocks Poised to Explode; Is Insider Trading Anomaly More Prominent Among Small-Caps?

Pioneer Energy Services Corp (NYSE:PES) had its most influential insider purchase a sizable block of shares last week. Chief Executive Officer and President, William Stacy Locke, bought 85,000 shares on Friday at a price of $1.19 per share and boosted his direct ownership stake to 753,663 shares. The CEO also holds an indirect ownership stake of 180,334 shares through Locke Children’s Trust.

The shares of the provider of land-based drilling services and production services to the oil and gas industry in the U.S. and Colombia are down by 77% over the past 12 months. Of course, all rig classes have suffered from the depressed oil prices environment, but AC drilling rigs, which are suited for horizontal pad drilling, are among most desirable rigs in the industry. Pioneer Energy Services built five AC drilling rigs during 2015 and sold 32 of its mechanical and lower horsepower electric drilling rigs. At of the end of 2015, 14 of the company’s 23 domestic drilling rigs were generating revenues, most of which were under term contracts. Pioneer Energy Services Corp (NYSE:PES) undertook major steps last year to adapt to challenging market conditions, which included total headcount reductions of 52%, wage rate cuts for operations personnel, incentive compensation reductions and employment benefits eliminations. The company’s revenue totaled $540.78 million in 2015, down from $1.06 billion reported for 2014.

Let’s now switch our focus on the health of the company’s balance sheet and its liquidity. Pioneer Energy Services has $395.00 million in debt as of December 31 and has to pay $23.25 million in interests within one year. At the same time, the company has cash and cash equivalents of $14.16 million as of the end of 2015, which decreased during the last year due to purchases of property and equipment and debt repayment of $60.0 million. However, the company has $300 million of principal amount outstanding under its Senior Notes and $95 million outstanding under its Revolving Credit Facility, so Pioneer Energy is well-positioned to endure the current challenging environment. A total of 11 hedge funds from our database were invested in the drilling services company at the end of December, accumulating 7.60% of its outstanding stock. Todd J. Kantor’s Encompass Capital Advisors added a 1.91 million-share position in Pioneer Energy Services Corp (NYSE:PES) to its equity portfolio during the December quarter.