24/7 Wall St. Insights

• Mexican billionaire Carlos Slim and other beneficial owners returned to boost stakes in energy companies and more.
• Plus, a CEO shows some love for a company that analysts hate.
• Also: 2 Dividend Legends to Hold Forever.

Despite a holiday-shortened week, market volatility remains a concern due to recession fears, geopolitical issues, and a contentious presidential election, among other things. Yet, insider buying remained fairly active in the past week. Most prominently, an investment firm controlled by Mexican billionaire Carlos Slim further boosted stakes in energy stocks. Other beneficial owners who made notable purchases were also repeat buyers. Let’s take a quick look at these transactions.

Is Insider Buying Important?

A well-known adage reminds us that corporate insiders and 10% owners really only buy shares of a company because they believe the stock price will rise and they want to profit from it. Thus, insider buying can be an encouraging signal for potential investors. This is all the more so during times of uncertainty in the markets, and even when markets are near all-time highs.

Remember that even when earnings-reporting season begins again, insiders will be prohibited from buying or selling shares. Below are some of the more notable insider purchases that were reported in the past week, starting with the largest and most prominent.

PBF Energy

• Buyer(s): 10% owner Control Empresarial de Capitales
• Total shares: around 1.2 million
• Price per share: $32.96 to $33.55
• Total cost: over $40.2 million

This Carlos Slim-controlled investment firm has been scooping up shares of refiner PBF Energy Inc. (NYSE: PBF) since early June and now has a stake of more than 19.8 million shares. The New Jersey-based company recently posted mixed quarterly results, due in part to lower refining margins. The stock has been in retreat since early April and is now changing hands near a 52-week low and below the buyer’s latest purchase price range. Analysts have a mean price target of $44.70, which would be a gain of almost 39% from the current share price. Yet, only six of the 17 analysts who follow the stock recommend acquiring shares. Note that the same owner also acquired shares of Talos Energy (see below).

Talos Energy

• Buyer(s): 10% owner Control Empresarial de Capitales
• Total shares: about 2.4 million
• Price per share: $10.64 to $11.20
• Total cost: more than $26.5 million

After picking up over $20 million worth of Talos Energy Inc. (NYSE: TALO) shares in August, this buyer came back for more. The stake is now up to more than 42.5 million shares. The Houston-based oil and gas company just reported a big discovery in the Gulf of Mexico, but also saw the departure of its chief executive. The share price is within the latest purchase price range and for over 15% less than six months ago. However, analysts anticipate that the stock will rise to $18.06 a share in the next 12 months, which would be a gain of 65% or so. Their consensus recommendation is to buy shares.

Lions Gate Entertainment

• Buyer(s): 10% owner Liberty 77 Capital
• Total shares: almost 1.3 million
• Price per share: $6.61 to $6.90
• Total cost: nearly $8.8 million

When Lions Gate Entertainment Corp. (NYSE: LGF-A) recently reported its fiscal first-quarter results, the entertainment giant fell short of expectations on both the top and bottom lines. After the report, the share price pulled back but then recovered. The stock is about 20% lower than six months ago but is trading higher than the buyer’s latest purchase price range. Analysts anticipate over 51% upside in the coming year to their consensus price target of $11.62. Note that this same buyer has been scooping up shares throughout the summer and its stake is up to nearly 14 million shares.

Steel Connect

• Buyer(s): 10% owner Steel Partners
• Total shares: almost 439,700
• Price per share: $12.00
• Total cost: almost $5.8 million

New York City-based supply chain services provider Steel Connect Inc. (NASDAQ: STCN) reported second-quarter results earlier this summer that included a one-time tax benefit. Shares rose about 15% afterward but have since given up that gain. The stock was last seen trading for less than the buyer’s purchase price, but the share price is still more than 18% higher than at the beginning of this year. Note that this buyer was picking up shares throughout June, and now its stake is up to over 1.5 million shares.

ProFrac

• Buyer(s): 10% owner THRC Holdings
• Total shares: more than 893,500
• Price per share: $6.37 to $6.70
• Total cost: over $5.1 million

After picking up shares throughout August, this buyer went back for more. Texas-based hydraulic fracturing services company ProFrac Holding Corp. (NASDAQ: ACDC) named a new chief financial officer back in the spring. Quarterly results posted last month lagged Wall Street expectations. The share price is more than 9% higher since then, but it is lower than the buyer’s latest price range and down 27% or so year to date. The consensus price target of $9.50 is less than the 52-week high of $11.94, but it represents almost 58% upside for the shares in the next 12 months. Yet, only three of seven analysts who cover the stock recommend buying shares.

Prospect Capital

• Buyer(s): CEO John Barry and another officer
• Total shares: 760,000
• Price per share: $5.17 to $5.23
• Total cost: more than $3.9 million

Prospect Capital Corp. (NASDAQ: PSEC) recently posted fiscal fourth-quarter earnings, which was followed by a contentious earnings call. The asset management firm has paid a monthly dividend of $0.06 per share since 2017. Though the stock has bounced from a recent 52-week low, it is still down more than 12%. Shares were last seen changing hands for a bit more than the purchase price range above. Wall Street is less than enthusiastic, though. None of the five analysts who follow the stock recommend buying shares. Note that Barry’s stake is up to around 69 million shares, which makes him a beneficial owner.

And Other Insider Buying

In the past week, some insider buying was reported at Atlanta Braves, Caterpillar, Core Scientific, Eaton, Hain Celestial, Heico, Healthcare Realty Trust, Lululemon Athletica, Lumen Technologies, and Penn Entertainment.

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