Tuesday, June 30, 2009

Energy names stand out among insider buys (HLX, CPX)

AlphaNinja - Below are some of the more notable insider share purchases over the last week. Some people point to insider selling as a possible indication of a company's fortunes -->> I tend to disagree with that in the broad sense, as share-based compensation is a large (or huge) portion of an executive's compensation, and he/she would be expected to monetize a portion of that over time. Insider buys, however, consist of the officer/director using their own cash to increase their stake in their own company. Presumably these folks know more about their businesses than anyone else, so when they step up to the plate it is worth taking notice.

Helix (HLX) - after a near tripling in the stock price since his last buy, the CEO bought another $1mil worth of stock. I like that he's still just as interested at $10 a share as he was at $2.50.


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A director of Complete Production Services (CPX) purchased 30,000 shares yesterday, at about $6.04. This is in addition to another 30,000 shares he bought on the 25th. Despite the recent rally, this stock is still down over 80% from its 2008 highs, leading this insider to plunk down some money. Houston-based CPX is facing a brutal oilfield services environment, but with oil back to half of its 2008 high, shares may have overshot to the downside....


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Worth mentioning is that insiders can be VERY, VERY wrong. Aubrey McClendon, CEO of Chesapeake Energy (CHK), was a darling of people who track insider buying. The only problem was that he bought all that stock on margin, so when the markets tanked he had to liquidate. People who bought when he did at the highs lost a lot of money.
"These involuntary and unexpected sales were precipitated by the extraordinary circumstances of the worldwide financial crisis,'' McClendon said in today's statement. ``In no way do these sales reflect my view of the company's financial position or my view of Chesapeake's future performance potential.''
McClendon, 49, owned 33.5 million shares, or 5.8 percent of the company's common stock, according to a Sept. 30 filing with the U.S. Securities and Exchange Commission. He was the company's third-largest shareholder.

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