- (0:25) - Oil Industry Setback: Value Investor Buying Opportunity
- (3:00) - When Insiders Buy, Should you too?
- (5:20) - Big Cap EMP Stocks: Where Are Insiders Buying?
- (7:50) - Small Cap EMP Stocks: Insider Buying
- (11:50) - Stocks With No Insider Buying
- (14:45) - Episode Roundup: Podcast@Zacks.com
Welcome to Episode #56 of the Value Investor Podcast
Every week, Tracey Ryniec, the editor of Zacks Value Investor portfolio service, shares some of her top value investing tips and stock picks.
Even though stocks are near all-time highs, there are several industries that have broken down and are now trading near lows. Energy is one of those.
A few months ago, on the podcast, Tracey covered the Big Oil and E&P companies that had insider buying. But as the shares fell further throughout the summer, she noticed the insiders jumping in again. They’re doubling down.
Two Scenarios When Insiders Buy
There are two different scenarios in which the insiders normally buy shares.
1. The shares have plunged and the insiders now think they’re oversold. They consider the shares to be a deal.
2. The shares are trading at or near all-time highs but the insiders think things are so bright at the company that they still want more shares.
Most of the insider buys are scenario #1, including right now in the energy industry.
Tracey looked at 17 Big Oil and E&Ps for insider buying. She didn’t consider the service companies, the refiners or the pipelines.
She also didn’t look at the fundamentals of any of these companies. In that way, they may not have traditional “value” characteristics. All investors should do their own research on company fundamentals.
Where Are the Insiders Buying?
1. In the last podcast, the big oil insiders were mostly on the sidelines, including at Exxon (XOM - Free Report) , Chevron and Conoco. Exxon shares are now down 15% year-to-date. Are the insiders jumping in?
2. A cluster of directors bought in both Apache (APA - Free Report) and in Pioneer Natural Resources (PXD - Free Report) . Insiders had been buying at one of them earlier in the year. But at the other, insiders haven’t bought since 2015. Where did the insiders jump in for the first time?
3. Insiders have been buying at many of the smaller E&Ps. Three directors and the CFO bought in July and August at QEP Resources (QEP - Free Report) . That’s a big cluster buy. Insiders didn’t even buy at the January/February oil stock lows in 2016.
4. Three directors also bought at Range Resources (RRC - Free Report) in August. They had been buying in both March and June.
5. Insiders bought in June 2017 at SM Energy and SRCI Energy. Did they buy again in August?
Investors can tell a lot by where the insiders are buying, or, in many cases, not buying, as shares slide. Remember, the insiders are risking their own cash.
Want to know if the insiders are buying at your favorite oil companies?
Tune into this week’s podcast to find out.
[In full disclosure, Tracey owns shares of APA, WLL and SRCI in her personal portfolio.]
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