Insiders Are Buying Sprague Resources

Oct.30.13 | About: Sprague Resources (SRLP)

In this article, I will feature a basic materials stock that has 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%.

Sprague Resources LP (NYSE:SRLP) is engaged in the purchase, storage, distribution, and sale of refined petroleum products and natural gas in the United States.

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Insider buying during the last 30 days

Here is a table of Sprague Resources' insider-trading activity during the last 30 days by insider.

Name Title Trade Date Shares Purchased Current Ownership Increase In Shares
Gary Rinaldi CFO Oct 25 5,001 5,001 shares from 0 to 5,001
Brian Weego VP Oct 25 2,500 2,500 shares from 0 to 2,500
David Glendon CEO Oct 25 5,000 5,000 shares from 0 to 5,000
Paul Scoff VP Oct 25 1,100 1,100 shares from 0 to 1,100
Michael Milligan Director Oct 25 20,000 20,000 shares from 0 to 20,000
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There have been 33,601 shares purchased by insiders during the last 30 days.

Financials

Sprague Resources reported the pro forma first six months financial results with the following highlights:

Revenue $2.2 billion
Net income $26.4 million
Cash $164,000
Debt $202.1 million
Net tangible book value -$0.02 per share
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Outlook

Sprague Resources' financial results are seasonal and generally better during the winter months, primarily because a large part of Sprague Resources' business consists of supplying home heating oil, residual fuel oil and natural gas for space heating purposes during the winter. For example, over the 36-month period ended June 30, 2013, Sprague Resources generated an average of approximately 70% of its total home heating oil and residual fuel oil net sales during the months of November through March.

Competition

Sprague Resources' competitors include Global Partners LP (NYSE:GLP). Global Partners has seen four insider buy transactions this year and the stock has a dividend yield of 6.71%. Only Sprague Resources has seen intensive insider buying during the past 30 days.

Conclusion

There have been five different insiders buying Sprague Resources and there have not been any insiders selling Sprague Resources during the last 30 days. All five of these insiders increased their holdings by more than 10%.

Sprague Resources started trading on October 25 after the IPO. The insiders bought their shares at the open market on October 25. Sprague Resources has a dividend yield of 9.4%. I believe the stock could be a good pick below the IPO price based on the intensive insider buying.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in SRLP over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.