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Since my December 7, 2012 article, dealing with four basic materials stocks, the stocks that I featured in the article have performed as follows:

CompanyPrice 12/6Price 1/18Change
OSK.TO$7.51$7.79+3.7%
RIO.TO$5.11$5.49+7.4%
TC$3.09$4.17+35.0%
PGLC$0.34$0.50+47.1%

In this article I will feature three basic materials stocks that have seen intensive insider buying during the last 30 days.

Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.
  2. The stock is sold by no insiders in the month of intensive purchasing.
  3. At least two purchasers increase their holdings by more than 10 percent.

1. CVR Refining, LP (NYSE:CVRR) engages in the refining of petroleum in the United States. The company owns two of only seven refineries in the underserved Group 3 of the PADD II region of the United States. The company owns and operate a 115,000 barrels per day complex full coking medium-sour crude oil refinery in Coffeyville, Kansas and a 70,000 bpd medium complexity crude oil refinery in Wynnewood, Oklahoma capable of processing 20,000 bpd of light sour crude oils (within its 70,000 bpd capacity). In addition, the company also controls and operates supporting logistics assets including approximately 350 miles of owned pipelines, over 125 owned crude oil transports, a network of strategically located crude oil gathering tank farms, and over 6.0 million barrels of owned and leased crude oil storage capacity. The strategic location of the company's refineries, combined with supporting logistics assets, provides the company with a significant crude oil cost advantage relative to its competitors. Furthermore, the Coffeyville and Wynnewood refineries are located approximately 100 miles and 130 miles, respectively, from the crude oil hub at Cushing, Oklahoma, and have access to inland domestic and Canadian crude oils that are priced based on the price of West Texas Intermediate crude oil. In the nine months ended September 30, 2012, the crude oil consumed at the refineries was at a discount to the price of WTI of $2.81 per barrel. Since the beginning of 2011, WTI crude has priced at a considerable discount to the price of Brent crude oil.

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Insider buying

  • Carl Icahn purchased 4,000,000 shares on January 17 pursuant to a initial public offering. Carl Icahn currently controls 124,000,000 shares or 84.0% of the company. Carl Icahn serves as a director of the company.
  • Keith Cozza purchased 10,000 shares on January 17 pursuant to a initial public offering. Keith Cozza currently holds 10,000 shares or less than 0.1% of the company. Keith Cozza serves as a director of the company.
  • Vincent Intrieri purchased 20,000 shares on January 17 pursuant to a initial public offering. Vincent Intrieri currently holds 20,000 shares or less than 0.1% of the company. Vincent Intrieri serves as a director of the company.
  • Samuel Merksamer purchased 6,000 shares on January 17 pursuant to a initial public offering. Samuel Merksamer currently holds 6,000 shares or less than 0.1% of the company. Samuel Merksamer serves as a director of the company.

Financials

The company reported the Pro Forma financial results for the first nine months ending September 30, 2012 with the following highlights:

Revenue$6,466 million
Net income$565 million
Cash$340 million
Debt$553 million

Outlook

Based upon the company's forecast for the twelve months ending December 31, 2013, and assuming the board of directors of the company's general partner declares distributions in accordance with the company's cash distribution policy, the company expects that its aggregate distributions for the twelve months ending December 31, 2013 will be approximately $697 million, or $4.72 per common unit.

My analysis

The stock started trading on January 17 after the initial public offering. There have been four insider buy transactions and there have not been any insider sell transactions since the IPO. The company's net tangible book value is $9.50 per share and the expected dividend yield is 19.0%. I have a bullish bias for the stock currently based on the attractive dividend yield and the intensive insider buying.

2. Potash Corporation of Saskatchewan (NYSE:POT) produces and sells fertilizers and related industrial and feed products primarily in the United States and Canada.

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Insider buys

  • Stephen Dowdle purchased 1,053 shares on December 31, 2012 pursuant to a purchase/ownership plan. Stephen Dowdle currently holds 47,918 shares or less than 0.1% of the company. Stephen Dowdle was appointed President, Sales in June 2010
  • David Delaney purchased 1,308 shares on December 31, 2012 pursuant to a purchase/ownership plan. David Delaney currently holds 124,040 shares or less than 0.1% of the company. David Delaney was appointed Executive Vice President and Chief Operating Officer in June 2010.
  • Lee Knafelc purchased 298 shares on December 31, 2012 pursuant to a purchase/ownership plan. Lee Knafelc currently holds 4,392 shares or less than 0.1% of the company. Lee Knafelc was appointed Vice President, Human Resources and Administration in January 2011, with responsibility for the company's global human resources.
  • Michael Hogan purchased 412 shares on December 31, 2012 pursuant to a purchase/ownership plan. Michael Hogan currently holds 1,437 shares or less than 0.1% of the company. Michael Hogan was appointed President on January 1, 2013 after 23 years with Potash, most recently as Senior Vice President.
  • Rick Harnung purchased 404 shares on December 31, 2012 pursuant to a purchase/ownership plan. Rick Harnung currently holds 3,677 shares or less than 0.1% of the company.

Financials

The company reported the third-quarter financial results on October 25 with the following highlights:

Revenue$2,143 million
Net income$645 million
Cash$461 million
Debt$4,038 million

Outlook

Potash forecasts full-year earnings between $2.40 and $2.60 per share which includes the impacts of the $0.39 per share adjustment for a Sinofert impairment charge recognized in the second-quarter of 2012.

Competition

Potash's competitors include BASF (OTCQX:BASFY) and The Mosaic Company (NYSE:MOS). Here is a table comparing these companies.

CompanyPOTBASFYMOSIndustry
Market Cap:35.74B89.74B25.28B2.36B
Employees:5,703113,4528,0001,000.00
Qtrly Rev Growth (yoy):-0.090.08-0.160.17
Revenue:7.68B99.88B10.05B3.96B
Gross Margin:0.480.260.280.28
EBITDA:3.85B15.31B2.84B485.63M
Operating Margin:0.430.110.220.09
Net Income:2.34B6.51B1.84BN/A
EPS:2.677.084.300.90
P/E:15.5413.7913.8013.80
PEG (5 yr expected):3.693.92N/A1.96
P/S:4.720.902.510.73

Potash's gross margin is above the industry average, which could explain some of the insider buying.

My analysis

There have been five different insiders buying and there have not been any insiders selling the shares during the past 30 days. There are 16 analyst buy ratings, 12 neutral ratings and one sell rating, with an average target price of $54.19. The stock is trading at a P/E ratio of 15.54 and a forward P/E ratio of 12.88. The company has a book value of $11.11 per share and the stock has a 2.03% dividend yield. I have a cautiously bullish bias for the stock currently based on the fundamental picture.

3. Talisman Energy (NYSE:TLM), an upstream oil and gas company, engages in the exploration, development, production, transportation, and marketing of crude oil, natural gas, and natural gas liquids.

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Insider buys

  • Paul Blakeley purchased 5,494 shares on January 18 pursuant to a purchase/ownership plan. Paul Blakeley currently holds 225,883 shares or less than 0.1% of the company. Paul Blakeley is Executive Vice-President, International Operations (East).
  • Helen Wesley purchased 2,702 shares on January 18 pursuant to a purchase/ownership plan. Helen Wesley currently holds 42,905 shares or less than 0.1% of the company. Helen Wesley is Executive Vice-President, Corporate Services.
  • Paul Warwick purchased 5,270 shares on January 18 pursuant to a purchase/ownership plan. Paul Warwick currently holds 5,270 shares or less than 0.1% of the company. Paul Warwick is Executive Vice-President, International Operations (West).
  • Scott Thomson purchased 4,592 shares on January 18 pursuant to a purchase/ownership plan. Scott Thomson currently holds 105,718 shares or less than 0.1% of the company. Scott Thomson is Executive Vice-President, Finance and Chief Financial Officer.
  • Paul Smith purchased 4,651 shares on January 18 pursuant to a purchase/ownership plan. Paul Smith currently holds 168,544 shares or less than 0.1% of the company. Paul Smith is Executive Vice-President, North American Operations.
  • Robert Rooney purchased 3,347 shares on January 18 pursuant to a purchase/ownership plan. Robert Rooney currently holds 108,499 shares or less than 0.1% of the company. Robert Rooney is Executive Vice-President, Legal and General Counsel.
  • Anthony Meggs purchased 3,729 shares on January 18 pursuant to a purchase/ownership plan. Anthony Meggs currently holds 3,729 shares or less than 0.1% of the company. Anthony Meggs is Executive Vice-President, Special Projects at Talisman.
  • Harold Kvisle purchased 1,958 shares on January 18 pursuant to a purchase/ownership plan. Harold Kvisle currently holds 36,958 shares or less than 0.1% of the company. Harold Kvisle was appointed President and Chief Executive Officer in September 2012.
  • Richard Herbert purchased 3,114 shares on January 18 pursuant to a purchase/ownership plan. Richard Herbert currently holds 32,508 shares or less than 0.1% of the company. Richard Herbert is Executive Vice-President, Exploration.
  • David Adams purchased 1,966 shares on January 18 pursuant to a purchase/ownership plan. David Adams currently holds 35,426 shares or less than 0.1% of the company. David Adams is a senior officer of the company.
  • Aernout van der Gaag purchased 430 shares on January 18 pursuant to a purchase/ownership plan. Aernout van der Gaag currently holds 3,156 shares or less than 0.1% of the company. Aernout van der Gaag is a senior officer of the company.

Financials

The company reported the third-quarter financial results on October 30 with the following highlights:

Net loss$731 million
Net debt$4,500 million
Exploration and development spending$893 million
Production415 mboe/d

The net loss of $731 million in the quarter is largely the result of $443 million in after-tax impairment charges, reflecting the impact of the company's planned exit from Peru, ongoing uncertainty with the Yme development in Norway, the prohibitions on shale operations in Quebec, and declining reservoir performance at Rev in Norway.

News

On December 17, 2012 Talisman announced the completion of its joint venture transaction with Addax Petroleum UK Limited, an indirect wholly-owned subsidiary of China Petrochemical Corporation (Sinopec Group) following receipt of government and regulatory approval.

The completion follows the original announcement of the transaction in July, 2012. Sinopec Group has acquired a 49% equity interest in Talisman's UK North Sea business, Talisman Energy (UK) Limited, for $1.5 billion. Talisman will continue to hold 51% of the joint venture company.

Competition

Talisman's competitors include BP (NYSE:BP) and EOG Resources (NYSE:EOG). Here is a table comparing these companies.

CompanyTLMBPEOGIndustry
Market Cap:12.69B139.84B34.35B53.67M
Employees:3,69583,4002,55054.00
Qtrly Rev Growth (yoy):-0.12-0.050.240.16
Revenue:7.78B371.81B10.67B18.02M
Gross Margin:0.650.140.580.63
EBITDA:1.88B37.48B5.53B134.77K
Operating Margin:-0.110.060.17-0.17
Net Income:-361.00M17.65B1.20BN/A
EPS:-0.425.534.43N/A
P/E:N/A7.9728.6119.36
PEG (5 yr expected):-4.604.260.920.75
P/S:1.610.383.204.77

Talisman is trading below the industry average P/S ratio, which could explain some of the insider buying.

My analysis

The stock has a $26.5 price target from the Point and Figure chart. There have been 11 different insiders buying and there have not been any insiders selling the shares during the past 30 days. There are eight analyst buy ratings, eight neutral ratings and 0 sell ratings, with an average target price of $15.25. The stock is trading at a forward P/E ratio of 21.34. The company has a book value of $9.08 per share and the stock has a 2.18% dividend yield.

Source: 3 Basic Materials Stocks With Recent Intensive Insider Buying