The implication is a belief among insiders that the stocks are going higher from here, not lower Given the pressure that higher energy prices and the Middle East conflict are putting on the global economy, it makes sense to think President Donald Trump and Iranian leaders might find a way out of the crisis relatively soon. In this scenario, oil prices would drop quickly, and so would energy stocks . There’s one problem with this positive outlook: Energy-sector insiders aren’t buying it.
Instead, they are buying their stocks — suggesting they think the stocks go higher from here, not lower. In the past few months as oil prices and energy stocks climbed, insiders at over 35 energy companies have put around $55 million into their stocks. Don’t Short Yourself offers weekly money tips to help you earn it, stack it and grow it.
I would like to receive updates and special offers from Dow Jones and affiliates. I can unsubscribe at any time. Some of the bigger examples since late May include the U.S. energy producers Matador Resources , where insiders including the CEO and CFO have purchased over $1.5 million in stock, and Vitesse Energy , where a director bought $1.6 million in shares.
The CEO at the refiner HF Sinclair bought shares worth $1.3 million in mid-August. True, the insider buying has happened at smaller energy companies, not at giants like Chevron or ExxonMobil . But that doesn’t mean the insiders know the sector any less.
In my experience, stretching over two decades, of tracking insiders, sectorwide buying like this — even at smaller companies — is a bullish signal. What explains the insider buying at a time when energy prices and stocks might soon retreat hard? I recently spoke with some energy-company insiders and sector analysts to find out.
Following are three reasons for the disconnect. Energy-sector veteran Rob Thummel, who helps managed the Tortoise Energy Fund , thinks the war with Iran will end after the U.S.’s midterm elections. But the new price floor for West Texas Intermediate crude, or WTI, will be $75, or around $10 above where it traded prewar.
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