Insider Buying Says Schlumberger (SLB), Entercom (ETM) and Hawaiian Holdings (HA) Are Undervalued

The market continues to reverse course this week, making up half of last week’s losses as fears that a China/U.S trade war could be imminent begin to fade. Getting less attention was the fact that China has launched an oil futures exchange using its own currency, which UBS Asset Management’s Hayden Briscoe described to Reuters as “the single biggest change in capital markets, maybe of all time.”

With the recent stock market turmoil creating plenty of discounts, we turn to insider trading to help pinpoint some of the biggest ones. Schlumberger Limited. (NYSE:SLB) heads the list, with two of the company’s leading executives buying shares yesterday, which are off by over 15% in the past two months. Insiders at Entercom Communications Corp. (NYSE:ETM) and Hawaiian Holdings, Inc. (NASDAQ:HA) have also been buying shares recently. We’ll look at that activity below.

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Entercom Communications Corp. (NYSE:ETM)

Who Bought Shares: Chairman Emeritus Joseph Field

How Many Shares Were Bought: 1.64 million shares

Date of the Transaction(s): March 9 – 26

Entercom Communications Corp. (NYSE:ETM) shares have shed over 10% of their value in 2018 and are down by over 30% during the past year, which prompted the company’s chairman emeritus, Joseph Field, to begin buying up shares beginning on March 9. Through yesterday, those purchases have amounted to 1.64 million shares.

Hedge Fund Ownership of Entercom Communications Corp. (NYSE:ETM) Surges in Q4: The number of hedge funds in our database that own shares of Entercom jumped to 28 by the end of the fourth quarter from just 12 at the start of it. Billionaire Steve Cohen‘s family office Point72 Asset Management opened a 5.56 million-share stake during the quarter, while several hedge funds with existing positions also made huge additions to those stakes, including Matt Sirovich and Jeremy Mindich’s Scopia Capital and Robert Henry Lynch’s Aristeia Capital.

It was during the fourth-quarter that Entercom completed its acquisition of CBS Radio, becoming one of the largest broadcasters in the world with 100 million listeners weekly. Despite the move being received positively, setting the company up for future growth and giving it added clout with advertisers, Entercom shares have trended down since its completion. Trading at a P/E of just 3.99 and with a dividend yield of 3.72%, there appears to be far more upside potential than downside risk priced into Entercom shares right now.

On the next page we’ll look at the insider buying activity over at Schlumberger Limited. (NYSE:SLB) and Hawaiian Holdings, Inc. (NASDAQ:HA).

Schlumberger Limited. (NYSE:SLB)

Who Bought Shares: CEO Paul Kibsgaard and EVP Patrick Schorn

How Many Shares Were Bought: 10,000 @ $64.68 per share and 5,000 @$64.79 per share, respectively

Date of the Transaction(s): March 26

Two of Schlumberger Limited. (NYSE:SLB)’s top executives bought shares yesterday, which continue to languish around the $65 mark, 13% off where they were a year ago. After surging by more than 25% from mid-December to mid-January, Schlumberger’s shares just as quickly gave back all of those gains. While the company’s executives had expressed bullishness on the market coming into 2018, increased competition and pricing weakness in North America have put somewhat of a damper on expectations for the second-half.

International Market Returns to Growth: On the other hand, the international market figures to pick up some of the North American slack, with Patrick Schorn stating during the company’s fourth-quarter conference call that it will return to growth in 2018 for the first time in four years. However, the reactivating and repositioning of equipment in key growth areas like Russia and the Middle East was expected to weigh on Schlumberger’s first-quarter profitability. Schlumberger’s first-quarter results, which will be released on April 20, are also expected to be negatively impacted by frack sand delays that were first reported in mid-February by Halliburton Company (NYSE:HAL).

Hawaiian Holdings, Inc. (NASDAQ:HA)

Who Bought Shares: Director Donald Carty

How Many Shares Were Bought: 5,000 @ $37.79 per share

Date of the Transaction(s): March 16

The director’s purchase on March 16 lifted his ownership to 18,675 shares of the Hawaii-centric airliner. Hawaiian Holdings shares are down by 26% over the last year and have been rather moribund for months, despite the company’s strong performance and announcement of a $100 million share repurchase program in early-December (equivalent to more than 5% of the float based on current share count and price).

Hawaiian Holdings, Inc. (NASDAQ:HA)’s RASM on the Rise: Hawaiian is coming off a strong February in which traffic jumped by 7.4%, outpacing even the company’s 4.9% capacity growth. That strong performance lead to a major positive revision to the company’s Q1 RASM metric. RASM (revenue per available seat mile) guidance for the first-quarter was raised earlier this month to growth of 3%-to-5%, from January guidance of between a decline of 0.5% to a gain of 2.5%.

Disclosure: None