12-month performance: -46% Insider activity: Bullish Buying pattern: Purchases from multiple insiders including CEO and CFO Recent news: Reduced dividend
Inter Pipeline is a Canadian energy infrastructure business that is engaged in the transportation, processing, and storage of energy products across Western Canada and Europe. Its operations are organised into four distinct business segments: Oil Sands Transportation, NGL Processing, Conventional Oil Pipelines, and Bulk Liquid Storage. The company is listed on the Toronto Stock Exchange and currently has a market capitalisation of CAD $4.8 billion
Inter Pipeline shares were hit hard earlier in the year when oil prices tanked. Trading near CAD $22 in mid-February, the stock fell to just over CAD $5 in mid-March. However, since then, the stock had rebounded back to $11. One reason the stock has rebounded is that the company has reduced its dividend. This reduction – which will result in annualised cash savings of CAD $525 million – should help contain costs and enhance financial flexibility. The company has also eliminated certain discretionary expenditures within its 2020 capital program to further protect its balance sheet. “We are focused on maintaining financial strength and flexibility in the current environment and believe we are well-positioned to generate positive returns for our investors over the long term,” the company advised in its recent first-quarter results.
Source: 2iQ Research
Looking at insider transaction activity here, we think it’s interesting that 12 different insiders, including CEO Christian Bayle and CFO Brent Heagy, have purchased IPL shares in the last week. Combined, Inter Pipeline insiders have purchased around CAD $1.6 million worth of stock since 11 May. This represents the largest amount of insider buying for a number of years. In our view, this pattern of cluster buying – where a number of insiders are buying stock within a short space of time – is a bullish signal. Of course, with oil prices remaining low, the near-term outlook remains uncertain. However, given that 12 insiders have recently purchased IPL shares, we think the risk/reward ratio here is favourable.
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