Two Paper Companies and One Oilfield Services Company Saw Insiders Buy Shares Last Week

Clearwater Paper Corp (NYSE:CLW) had not registered any insider buying for quite some time until last week. John D. Hertz, Senior Vice President and Chief Financial Officer since 2012, snapped up 5,180 shares on Thursday at prices ranging from $38.19 to $38.69 per share and currently owns 39,299 shares. The shares of the producer of private label tissue and premium bleached paperboard products are down 36% over the past 52 weeks, after having dropped 12% year-to-date. The company operates through two reporting segments: the Consumer Products segment (accounted for 55% of 2015 net sales), which manufactures and markets at-home tissue products in various tissue categories; and the Pulp and Paperboard segment, which manufactures and sells bleached paperboard for the high-end segment of the packaging industry. Clearwater’s net sales totaled $1.75 billion in 2015, down by 10.9% year-on-year, mainly due to lower non-retail tissue shipments as a result of the sale of its specialty business and mills in December 2014. The decrease in sales of tissue converted product cases and lower prices for commodity grade paperboard also impacted the company’s financial performance. Nonetheless, Clearwater Paper appears to be undervalued relative to the broader market at the moment. The stock is priced at 8.16 times expected earnings, below the average forward P/E multiple of 9.9 for the Paper Products industry and the 16.15 for the S&P 500. There were 14 hedge funds tracked by Insider Monkey with stakes in the company at the end of December, which accumulated nearly 6% of its outstanding common stock. Israel Englander’s Millennium Management added a 195,122-share position in Clearwater Paper Corp (NYSE:CLW) to its portfolio during the October-to-December period.

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KapStone Paper and Packaging Corp. (NYSE:KS) is another player in the Paper and Products industry that witnessed insider buying last week. Director Robert J. Bahash purchased 20,000 shares on Thursday at prices in the range of $9.10 to $9.30 per share and increased his overall holding to 26,905 shares. The producer of containerboard and kraft paper has seen its stock decline by 71% over the past year. In June 2015, KapStone acquired 100% of partnership interests in distributor of packaging materials Victory Packaging L.P. and its subsidiaries for $615.0 million cash and $2.0 million of working capital adjustments. KapStone’s consolidated net sales for 2015 totaled $2.80 billion, up from $2.30 billion reported for 2014. However, the increase was mainly attributable to the Victory acquisition, which accounted for $582.9 million of net sales. Meanwhile, the company’s net income decreased to $106.4 million or $1.09 per diluted share in 2015 from $171.9 million or $1.76 per share a year earlier. The bottom-line results were mainly impacted by lower containerboard and extensible kraft paper prices, stronger U.S. dollar, lower sales volume, and a 12-day strike at one of its paper mills. Earlier this month, analysts at Deutsche Bank downgraded the stock to ‘Hold’ from ‘Buy’ and slashed the price target to $14 from $22, after the company had released its fourth-quarter earnings report. Nevertheless, the shares of KapStone are currently trading at 7.07 times expected earnings, substantially below the forward P/E multiple for the Paper Products industry. The hedge fund sentiment towards the stock was negative in the fourth quarter, as the number of money managers with stakes in the company dropped to 14 from 24 quarter-on-quarter. D.E. Shaw, founded by David E. Shaw, reported owning 2.35 million shares of KapStone Paper and Packaging Corp. (NYSE:KS) through its latest 13F.

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