Analyzing Friday's Noteworthy Insider Trades In The Basic Materials, Energy And Industrial Sectors

by: GuruFundPicks

We present here three noteworthy buys and five noteworthy sells in the basic materials, energy and industrial sectors from Friday's (March 2nd, 2012) SEC Form 4 (insider trading) filings, as part of our daily and weekly coverage of insider trades. These were selected by a review of over 530 separate transactions in over 300 different companies filed by insiders on Friday. The filings are noteworthy based on the dollar amount sold, the number of insiders buying or selling, and based on whether the overall buying or selling represents a strong pick-up based on historical buying and selling in the stock (for more info on how to interpret insider trades, please refer to the end of this article):

Centerpoint Energy Inc. (NYSE:CNP): CNP provides electricity transmission and distribution, natural gas distribution and sales, interstate pipelines and gathering operations to customers in AR, IL, IA, KS, LA, MN, MS, MO, OK, TX, and WI. On Friday, CEO David McClanahan filed SEC Form 4 indicating that he exercised options and sold the resulting 103,377 shares for $2.0 million, ending with 0.83 million shares in direct and 39,197 shares in indirect holdings. In comparison, insiders sold 0.38 million shares in the past year.

CNP just reported its Q4 last Wednesday, beating analyst earnings (27cents v/s 19cents) and missing revenue estimates, and guiding in-line for FY earnings. The stock has been up lately, having doubled from the 2008/09 lows, and is consolidating near 10-year highs, up almost 20% in the past year. It trades at a discount 15-16 forward P/E compared with the 19.4 average for the electric utilities group, while earnings are projected to flat-line from $1.27 in 2011 to $1.25 in 2013. Furthermore, it also has an attractive dividend yield of 4.3% versus the 3.7% average for the group.

Noble Corp. (NYSE:NE): NE is a Swiss company engaged in offshore contract drilling services for the oil and gas industry worldwide. On Friday, Director Michael Cawley filed SEC Form 4 indicating that he exercised options and sold the resulting 15,000 shares for $0.6 million, ending with 70,079 shares after the sale (not including derivative holdings), the only sale in the last year.

NE reported a mixed Q4 in late January, beating earnings (50cents v/s 49cents) and missing revenue ($751 million v/s $772 million). Its shares are up strongly since the report, up over 12% in the last four-to-five weeks, and they currently trade at 9-10 forward P/E and 1.4 P/B compared with averages of 10.9 and 1.3 for its peers in the oil and gas drilling group.

Duke Energy Corp. (NYSE:DUK): DUK provides electrical and natural gas utility services to about 4 million electric and 0.5 million gas customers in the Americas. On Friday, three insiders filed SEC Forms 4 indicating that they sold 81,739 shares for $1.7 million, with the sellers being Group Executives Lynn Good (31,500 shares), Keith Trent (33,031 shares) and Jennifer Weber (17,208 shares). Of these, the 31,500 shares sold by Ms. Good were sold pursuant to a 10b5-1 plan. Also, in comparison, insiders sold 0.22 million shares in the past year. DUK shares are up over 15% in the past year, trading near 10-year highs at a discount 14-15 forward P/E and 1.2 P/B compared with averages of 20.1 and 1.3 for its peers in the electric utilities group. Also, it yields an attractive 4.7% dividend yield, well above the 3.7% average for the group.

On top of these, some additional large insider sales reported on Friday in the basic materials, energy and industrial sectors included:

  • a $1.5 million sale by two insiders at Clean Energy Fuels Corp. (NASDAQ:CLNE), a provider of natural gas as an alternative fuel to vehicle fleets in the U.S. and Canada, including customers in the refuse, transit, shuttle, taxi, intrastate and interstate trucking, airport and municipal fleet markets; and
  • a $6.8 million sale by CEO James Gallogly, pursuant to a 10b5-1 plan, at Netherlands-based chemical company Lyondellbasell Industries (NYSE:LYB).

Furthermore, insiders also reported noteworthy buys on Friday in the basic materials, energy and industrial sectors in:

  • Xylem Inc. (NYSE:XYL), a provider of water technology solutions, water and water treatment solutions, and industrial pump and related technologies, in which two insiders purchased 2,000 shares for $52,837;
  • Illinois Tool Works Inc. (NYSE:ITW), a manufacturer of plastic and metal fasteners and fastening tools for the construction, automotive, and appliance markets, in which Director James Griffith purchased 2,000 shares for $111,140, in comparison to insiders having purchased a total of 4,000 shares in the past year; and
  • Superior Energy Services (NYSE:SPN), a provider of specialized oilfield services and equipment for the production and drilling needs of oil and gas companies, in which CEO David Dunlap purchased 10,000 shares for $0.3 million, in comparison to insiders having purchased 30,000 shares in the past year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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