Market Overview

Insider Buying At NuStar Energy Following Permian Deal

Insider Buying At NuStar Energy Following Permian Deal
  • Insiders at this pipeline and storage giant scooped up many shares this past week.
  • Those purchases followed the announcement of the acquisition of Permian assets.
  • The share price dropped sharply following news of the deal.

Conventional wisdom says 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, insider buying can be an encouraging signal for potential investors, particularly in an overpriced market. Case in point: recent notable buys at NuStar Energy L.P. (NYSE: NS).

This past week, four NuStar directors bought more than 329,000 units of this master limited partnership. The unit price for the purchases was $46.35 for a total of around $15.25 million. Note that just one of those directors, who was also a former CEO of Valero Energy, was responsible for almost $15 million of that total.

Also last week, NuStar announced that it intended to acquire Navigator Energy Services for its Permian infrastructure, and following that it saw an upgrade from Credit Suisse. The stock pulled back around 8 percent after the news of the Navigator deal and hit a year-to-date low this week.

NuStar currently has a market capitalization near $3.7 billion. Short interest is more than 5 percent of the float, and the consensus recommendation of analysts is to hold shares. The stock is down almost 5 percent since the beginning of the year and closed most recently at $47.39, above these insider purchase prices.

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