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3 Natural Gas And Oil Companies That Insiders Are Buying

July 6, 2016 7:03 am
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  • Insiders continue to snap up seeming bargains, even with the volatility in the markets.
  • Three energy infrastructure companies saw notable insider purchases recently.
  • Strong insider buying is often considered a positive sign for investors, particularly during volatile periods.

Ahead of the Independence Day holiday, chief executives and other insiders took advantage of the market turmoil that followed the outcome of the Brexit vote to increase their stakes in Cheniere Energy, Inc. (NYSE: LNG), NuStar Energy L.P. (NYSE: NS) and QEP Resources Inc (NYSE: QEP).

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. Insider buying can be an encouraging signal for potential investors. Companies as diverse as investment brokerage Leucadia National and Biglari Holdings, parent of the Steak n Shake restaurant chain and Maxim magazine, lately have seen insiders come to the buy window in a big way, but here we focus on three oil and gas pipeline companies.

Cheniere Energy

Recently named CEO Jack Fusco has scooped up another 29.000 shares of this Houston-based liquefied natural gas giant at $34.27 per share. That cost him more than $993,000. Fusco also bought shares earlier in June. But note that famed short seller Jim Chanos has Cheniere as a top short pick for the year.

This terminal and pipeline company has a market cap of more $8 billion. It pays no dividend. The share price is up more than 63 percent since the low back in February and closed most recently at $37.08, so the timing of the most recent sales seem to have worked out for Fusco. The Dow Jones Industrial Average is about 12 percent higher in that time.

See also: Wal-Mart Founder's Children Sell ~$309 Million In Wal-Mart Shares

NuStar Energy

A director purchased almost 20,000 shares of this petroleum and anhydrous ammonia storage and transportation company. At a share price of $47.69, that transaction totaled shy of $954,000. The same director also bought 40,000 shares of general partner NuStar GP Holdings, LLC (NYSE: NSH) for around $1 million.

This San Antonio-based company has a market cap less than $4 billion and a dividend yield of almost 8.9 percent. More than 6 percent of NuStar Energy's float is short. The stock closed most recently at $48.43 per share, which is up more than 20 percent since the beginning of the year.

QEP Resources

The chief executive last week added more than 16,000 shares to his stake in this Denver-based exploration and production company. At $17.85 per share, that cost him around $299,000 and raised his stake to more than 759,000 shares. Some of these shares are held in a trust for which he and his spouse are trustees. QEP is scheduled to reveal second-quarter results later this month.

QEP has a market cap near $4 billion, though it does not offer a dividend. The stock ended most recently at $17.25 a share, so perhaps the buy-in came too soon. The share price is down about 2 percent in the past week, but still more than 28 percent higher year to date.

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

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