Investing

CEO Stake in NewMarket Soars Despite Trim

Trey Thoelcke

Published: February 9, 2024 9:10 am

A lot can be learned by following the behavior of company insiders as they manage their positions in their own companies. People may sell for many reasons (buying a house, paying for college, or estate planning). They generally only buy for one reason: to make more money.

The chief executive officer is often one of the largest and best-informed shareholders in any company. Let’s have a look at whether NewMarket Corp. (NYSE: NEU) CEO Thomas Gottwald has been increasing or decreasing his shares over the past year and whether he knows something we don’t.

What You Need to Know About NewMarket

NewMarket primarily engages in the manufacture and sale of petroleum additives. The company offers the following:

• Lubricant additives for use in various vehicle and industrial applications, including engine oils, transmission fluids, off-road powertrain and hydraulic systems, gear oils, hydraulic oils, turbine oils, and other applications where metal-to-metal moving parts are utilized.
• Engine oil additives designed for passenger cars, motorcycles, on- and off-road heavy-duty commercial equipment, locomotives, and engines in ocean-going vessels.
• Driveline additives designed for products, such as transmission fluids, axle fluids, and off-road powertrain fluids.
• Industrial additives designed for products for industrial applications consisting of hydraulic fluids, grease, industrial gear fluids, and industrial specialty applications, such as turbine oils.
• Fuel additives that are used to enhance the oil refining process and the performance of gasoline, diesel, biofuels, and other fuels to industry, government, original equipment manufacturers, and individual customers.

In addition, the company engages in the marketing of anti-knock compounds, as well as contracted manufacturing and services activities, and it owns and manages a real property in Virginia. It operates in North America, Latin America, the Asia Pacific, Europe, the Middle East, Africa, and India.

NewMarket was founded in 1887 and is headquartered in Richmond, Virginia. That is also the home of Altria Group Inc. (NYSE: MO), CarMax Inc. (NYSE: KMX), and Dominion Energy Inc. (NYSE: D). Competitors of NewMarket include Albemarle Corp. (NYSE: ALB) and  LyondellBasell Industries N.V. (NYSE: LYB). Gottwald has been chief executive since 2004 and chair of the board of directors since 2014.

The company posted annual revenue of over $2.7 billion, and it has a market capitalization of around $5.6 billion. The stock has gained over 61% in the past year, far outperforming the Dow Jones industrial average in that time. The shares are up about 7% year to date.

How NewMarket’s CEO Is Trading

One year ago, Gottwald owned about 568,000 shares, worth nearly $170.9 million. Today, he owns over 375,500 shares, which is a stake of around 4%. Despite that 193,000 or so share decrease in the total, the share price gain has boosted the value of the stake by more than 30% to over $222.9 million.

While the rising value of the stake no doubt pleases CEO Thomas Gottwald, by selling shares he has left money on the table. Gottwald could have sold shares for a variety of reasons, and we may never know why. Unless he knows something that we don’t, there’s little reason to suspect a lack of confidence. The past couple of quarterly reports have been solid to strong, the company recently completed a strategic acquisition, and the dividend has grown over the past decade. On the other hand, the stock gets virtually no analyst coverage.

Other internal shareholders to watch include former CEO Bruce Gottwald. He owns 11.7% of shares outstanding, worth about $667.6 million. Chief Administrative Officer Bruce Hazelgrove owns 2.2% of shares outstanding, worth about $126.8 million. (These 19 executives pay themselves over $150 million a year.)