Market Overview

3 Energy Insiders Taking Advantage Of The Sell-Off

3 Energy Insiders Taking Advantage Of The Sell-Off
  • Some energy insiders are taking advantage to beginning of the year sell-off.
  • Enterprise Products Partners is among those that have seen notable insider buying lately.
  • Strong insider buying is often considered a positive sign for investors, particularly during volatile times.

The stock markets have been crushed to start off 2016, but some insiders have jumped on the opportunity to increase their stakes. That some of the biggest buys have come from insiders at energy master limited partnerships (MLP), one of the parts of the oil patch that has struggled most.

Conventional wisdom says that insiders and 10 percent owners really only buy shares of a company for one reason -- they believe the stock price will rise and they want to profit from it. So it may be a good sign that they are not panicking, particularly in the downtrodden energy sector.

Crestwood Equity Partners

Since the beginning of the year, a director has acquired four batches of Crestwood Equity Partners LP (NYSE: CEQP) units at between $17.95 and $20.80 apiece. Altogether those nearly a million shares cost around $18 million. Throughout December, that director bought more than 40 million shares.

The market cap of this master limited partnership is about $1.2 billion, and the distribution yield is near 26.5 percent. The stock has lost more than three-quarters of its value in the past 52 weeks.

See also: How To Play An Oil Turnaround (If It's Happening)

Enterprise Products Partners

A director scooped up more than 3.8 million Enterprise Products Partners L.P. (NYSE: EPD) units last week. At $26.11 per unit, that totaled about $100 million. The transaction occurred right around the time this MLP declared its 46th consecutive quarterly distribution increase.

The market cap of this Houston-based company is about $46 billion, and its investors enjoy a distribution yield of about 6 percent. The unit price hit a 52-week low in early December.

Summit Midstream Partners

A director recently bought almost $2.7 million worth of Summit Midstream Partners LP (NYSE: SMLP), or nearly 145,000 units at $18.43 to $18.64 apiece. The stock surged in the latter weeks of December, only to fall with the stock markets after the start of the new year.

Note that this $1.1 million market MLP has a distribution yield near 12.3 percent, but the return on equity is in the red. The stock is down more than 7 percent since the first of the year.

At the time of this writing, the author had no position in the mentioned equities.

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