Insiders made noteworthy buys (see definition below) in five basic materials sector stocks this past week (June 4th to 8th, 2012). These were selected based on a review of over 1,600 separate SEC Form 4 (insider trading) filings last week, as part of our daily and weekly coverage of insider trades. 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:
Hallador Energy Co. (HNRG): HNRG is engaged in the production of steam coal, with its primary operating property being the Carlisle coal mine in western Indiana. On Monday and Tuesday, CEO Victor Stabio filed SEC Form 4 indicating that he purchased 6,305 shares for $42,243, ending with 0.47 million shares after the purchase. In comparison, insiders purchased a total of 14,705 shares in the past two years.
The purchase by CEO Stabio comes at a time of rampant pessimism in the coal mining group, driven lower by about 25% YTD, over concerns about falling demand due to the weak global economy as well as competition from cheap natural gas and renewable fuels as a source fuel for electricity generation by utilities. Mirroring the downdraft in the group, HNRG shares have also plunged about 20% YTD, and currently trade near 52-week lows, at a current 6.6 P/E on a TTM (trailing-twelve-month) basis and 1.4 P/B compared to averages of 8.1 and 1.2 for its peer sin the coal mining group.
The company, in its latest Q1 (March), reported missed analyst earnings estimates (21c v/s 28c), with earnings also come in lower year-over-year (v/s 29c) and sequentially from the prior quarter (v/s 30c). The stock is not widely followed, with one of the two analysts covering it rating it at buy and the other at hold, with a mean price target of almost $12, well above current prices in the $7-$8 range. Given the cyclicality of the coal mining group, aggressive insider purchases may be a signal worth watching, as we have seen noteworthy insider purchases in recent weeks also at peer coal mining companies Arch Coal Inc. (ACI), Consol Energy (CNX) and Walter Energy Inc. (WLT).
Earlier, we reported last week an insider purchase of 5,000 shares at ACI, that is engaged in the production of steam and metallurgical coal from surface and underground mines, followed by another 1,000 share purchase this week by VP Jeffrey Strobel. Also this week, at coal mining company CNX, a producer of bituminous coal and coal-bed methane gas, primarily in the northern and central Appalachian and Illinois basins, Director Joseph Williams filed SEC Form 4 this week, indicating that he purchased 1,000 shares for $28,000, in comparison to a total of 2,000 shares purchased by insiders in the past two years. Also at WLT, that is a producer of hard coking coal from underground mines for by the steel industry, CAO Robert Kerley reported purchased 970 WLT shares last week for $49,731.
In addition to coal miners HNRG, ACI, and CNX above, insiders also reported noteworthy buys this past week in the following two other basic materials sector stocks, the first of which have also experienced plunging prices recently:
- Titanium Metals (TIE), that is a manufacturer of titanium sponge, and melted and mill products for the aerospace, chemical, power and pollution control industries, in which Vice Chairman & CEO Steven Watson filed SEC Form 4 indicating that he purchased 3,000 shares for $32,919, in comparison to 6,000 shares purchased by insiders in the past six months; and
- Lyondellbasell Industries NV (LYB), that is a Netherlands-based manufacturer of polypropylene compounds, propylene oxide, polyethylene, ethylene and propylene, in which Director Robin Buchanan filed SEC Form 4 indicating that he purchased 5,753 shares for $0.22 million, ending with 22,793 shares after the purchase, and in comparison to 26,345 shares purchased by insiders in the past year.
Credit: Fundamental data in this article and company descriptions are based on SEC filings, Zacks Investment Research, Yahoo, Thomson Reuters and Briefing.com. The information and data is believed to be accurate, but no guarantees or representations are made.
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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