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24/7 Wall St. Insights
- September may be a scary month for investors, but that hasn't stopped insiders from further boosting their stakes, some of them in energy companies.
- Those insiders include Mexican billionaire Carlos Slim and other beneficial owners.
- Also: 2 Dividend Legends to Hold Forever .
Conventional wisdom is that September is the toughest month for investors. If nothing else, the third quarter is winding down, and soon we'll be rushing headlong toward the end of the year. Insider buyers haven't been shy in the past week, though. In fact, repeat buyers, including Mexican billionaire Carlos Slim, have been further boosting their stakes, several of them in energy stocks. Let's take a quick look at these transactions.
Is Insider Buying Important?
What does insider buying tell us?
A well-known adage reminds us that corporate insiders and 10% owners really only buy shares of a company because they believe the stock price will rise and they want to profit from it. Thus, insider buying can be an encouraging signal for potential investors. This is all the more so during times of uncertainty in the markets, and even when markets are near all-time highs.
Remember that during earnings-reporting season, insiders are prohibited from buying or selling shares. Below are some of the more notable insider purchases that were reported in the past week, starting with the largest and most prominent.
PBF Energy
A beneficial owner and return buyer.
- Buyer(s): 10% owner Control Empresarial de Capitales
- Total shares: more than 2.0 million
- Price per share: $31.67 to $33.12
- Total cost: over $65.4 million
This Carlos Slim-controlled investment firm has been scooping up shares of refiner PBF Energy Inc. ( NYSE: PBF ) since early June, including $40 million or so last week. Now its stake is up to more than 21.8 million shares. Last month, the New Jersey-based company posted mixed quarterly results, due in part to lower refining margins. The stock has been in retreat since early April, just hit a new 52-week low, and was last seen below the buyer's latest purchase price range. Analysts have a mean price target of $43.40, which would be a gain of almost 40% from the current share price. Yet, only six of the 17 analysts who follow the stock recommend acquiring shares. Note that the same owner also acquired shares of Talos Energy (see below).
Prospect Capital
A chief executive shows the love again.
- Buyer(s): CEO John Barry and another officer
- Total shares: almost 1.6 million
- Price per share: $5.25 to $5.33
- Total cost: more than $8.2 million
Prospect Capital Corp. ( NASDAQ: PSEC ) recently posted fiscal fourth-quarter earnings, which was followed by a contentious earnings call. The asset management firm has paid a monthly dividend of $0.06 per share since 2017. Though the stock has recovered somewhat from a recent 52-week low, it is still down about 11% year to date. Shares were last seen changing hands for a bit more than the purchase price range above. Wall Street is less than enthusiastic, though. None of the five analysts who follow the stock recommend buying shares. Note that Barry also bought shares last week and his stake is up to more than 71 million shares. That makes him a beneficial owner.
Talos Energy
Carlos Slim on a buying spree.
- Buyer(s): 10% owner Control Empresarial de Capitales
- Total shares: 323,000
- Price per share: $10.73 to $10.98
- Total cost: about $3.5 million
After picking up over $26 million worth of Talos Energy Inc. ( NYSE: TALO ) shares last week, and more in August, this buyer came back for more. The stake is now up to almost 42.9 million shares. The Houston-based oil and gas company just reported a big discovery in the Gulf of Mexico, but also saw the departure of its chief executive. The share price is just above the latest purchase price range and for over 14% less than six months ago. However, analysts anticipate that the stock will rise to $18.06 a share in the next 12 months, which would be a gain of 68% or so. Their consensus recommendation is to buy shares.
Appian
Further boosting a stake in this tech company.
- Buyer(s): 10% owner Abdiel Capital
- Total shares: over 111,300
- Price per share: $30.38 to $32.50
- Total cost: more than $3.4 million
After scooping up shares for much of the summer, this hedge fund manager returned to further boost its stake in Appian Corp. ( NASDAQ: APPN ) to over 10.0 million shares. The AI-enabled business process automation provider just won a key contract from the Department of Defense. Recently, it also announced plans to expand its footprint in Japan. Shares plunged after a mixed earnings report. They are down almost 12% from six months ago but just above the buyer's latest purchase price range. The stock has a Hold recommendation from the consensus of analysts. Their mean price target has dropped to $34.50.
ProFrac
Another big vote for fracking.
- Buyer(s): 10% owner THRC Holdings
- Total shares: more than 481,00
- Price per share: $6.13 to $6.50
- Total cost: over $3.0 million
After picking up shares throughout August, this buyer went back for more. Texas-based hydraulic fracturing services company ProFrac Holding Corp. ( NASDAQ: ACDC ) named a new chief financial officer back in the spring. Quarterly results posted last month lagged Wall Street expectations. The share price is less than 2% lower since then, and it is lower than the buyer's latest price range and down 22% or so year to date. The consensus price target of $9.50 is less than the 52-week high of $11.94, but it represents more than 60% upside for the shares in the next 12 months. Yet, only three of seven analysts who cover the stock recommend buying shares.
CNX Resources
Where are shares heading?
- Buyer(s): a director
- Total shares: 75,000
- Price per share: $26.63 to $26.97
- Total cost: around $2.1 million
In its second-quarter report, CNX Resources Corp. ( NYSE: CNX ) fell short of expectations on the top line but topped bottom-line estimates. Since then, the share price has risen more than 9% and is higher than the purchase price range. The stock recently hit a multiyear high of $28.23, having overrun Wall Street's consensus price target. Of 12 analysts who cover the stock, only five recommend buying shares, but three of them have Strong Buy ratings. Note that this same buyer also picked up 75,000 shares in August, and his stake now is up to more than 401,800 shares.
And Other Insider Buying
Some smaller insider buys were seen at Dollar General, Hilton Hotels, Lions Gate Entertainment, and more.
In the past week, some insider buying was reported at Apollo Global Management, Aptiv, Bowlero, Dollar General, Dollar Tree, Eversource Energy, Fortinet, Hain Celestial, Herbalife, Hilton Hotels, Lions Gate Entertainment, Marriott Vacations, Matador Resources, PENN Entertainment, and Permian Resources.
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