2iQ Insider Brief: Kinder Morgan(KMI US) CVS Health Corp(CVS US) NIBC Holding NV(NIBC NA)

Kaloyan Kolev 22 March 2019

Kinder Morgan (KMI: US) 

12-month performance: +26%
Insider activity: Bullish
Buying pattern: Multiple large purchases from Chairman
Recent news: Benefitting from oil price strength

 

Kinder Morgan is one of the largest energy infrastructure companies in North America. Operating approximately 84,000 miles of pipelines, the group transports natural gas, refined petroleum products, crude oil, and carbon dioxide across the US, and its customers include major oil companies, energy producers and shippers, local distribution companies and businesses across many industries. The stock is listed on the New York Stock Exchange and currently has a market capitalisation of $45.5 billion.

 

We last covered Kinder Morgan back in early February. At the time, we observed that Chairman Richard Kinder had just added a significant amount of stock to his personal holding in the company, spending over $17.5 million on KMI shares in a matter of weeks. We interpreted this as a bullish signal and said that in our view, the outlook for the shares was positive.

 KMI_2

Source: 2iQ Research

Fast forward to today and that call looks good as Kinder Morgan shares have climbed around 11% since our last report, outperforming the S&P 500 index by around 6.5%. That’s a solid return in less than two months. Yet what’s really interesting is that the Chairman has continued to buy heavily in recent weeks. Since our last report on Kinder Morgan, the top-level director has spent another $43.6 million on KMI shares, and he’s been happy to pay higher prices, buying all the way up to just below $20. These purchases suggest that the key insider sees further upside potential in the shares at current levels. With the stock currently trading at around nine times forecast cash flow – a ratio well below that of many of its peers – and the Chairman and founder continuing to load up on stock, we think the outlook for the shares remains favourable.

 

CVS Health Corporation (CVS: US) 

12-month performance: -10%
Insider activity: Bullish
Buying pattern: Multiple directors buying including Chairman
Recent news: Issued disappointing guidance for 2019

 

CVS Health Corporation is an American integrated pharmacy healthcare company. The group owns a broad range of healthcare assets, including nearly 10,000 CVS Pharmacy stores, 1,100 MinuteClinic retail clinics, and 24 speciality pharmacy stores, as well as online pharmacy websites. The stock is listed on the New York Stock Exchange and currently has a market capitalisation of $72 billion.

 

Shares in CVS Health have fallen significantly since late February after the group issued disappointing guidance for 2019. Announcing that 2019 will be a ‘transition year’ after the company’s recent acquisition of health insurance group Aetna, CVS told investors that full-year 2019 adjusted earnings per share are likely to be between $6.68 and $6.88 – considerably lower than the $7.41 figure Wall Street analysts had been expecting.

 CVS_US

Source: 2iQ Research

CVS shares are clearly out of favour right now after the company’s recent earnings guidance. Year to date, the stock is down nearly 15%, versus a 13% rise for the S&P 500 index. Yet examining insider transaction activity, we think the shares could be worth a closer look after the recent share price fall. We say this because since the beginning of March, four top-level directors – including Chairman David Dorman – have stepped up to buy shares in the company, which suggests these directors see upside potential in the stock. Two of these directors spent over $500,000 on stock each, which we see as a bullish signal. With CVS CEO Larry Merlo recently stating that the group is positioned well for 2020 and beyond, and multiple directors buying shares, we think the stock look interesting from a medium-term view. 

 

NIBC Holding NV (NIBC: NA) 

12-month performance: -6%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including Chairman/CEO and CFO
Recent news: Majority shareholder sold shares

 

NIBC Holding is a Netherlands-based merchant bank that offers corporate and retail banking products and services. Its corporate banking activities include advising, structuring, financing and co-investing across debt and equity in Northwest Europe, while its retail banking activities primarily consist of online retail savings products and services in the Netherlands, Belgium and Germany, and mortgage lending in the Netherlands. The stock is listed on the Euronext Amsterdam and currently has a market capitalisation of €1.2 billion.

 

While NIBC reported solid FY2018 results in late February, its shares dipped recently after majority shareholder J.C. Flowers & Co disposed of approximately 11.7 million shares in the group in early March. The sale was carried out through an accelerated bookbuild offering to institutional investors at a price of €8.40 – nearly 12% below the stock’s price at the beginning of March – which clearly impacted sentiment towards the stock. Having traded as high as €9.50 at the beginning of the month, the stock currently trades for €8.20.

 NIBC

Source: 2iQ Research

Looking at insider transaction activity at NIBC, we think the recent share price dip may have created an attractive buying opportunity. This is due to the fact that since the shares have pulled back, four top-level directors have stepped in to buy shares, which suggests these key insiders see upside potential at current levels. Those buying have included Chairman and CEO Paulus De Wilt, who acquired 6,100 shares at a price of €8.14, as well as CFO Herman Dijkhuizen who also bought 6,100 shares for €8.14. These two directors are likely to have an excellent understanding of the group’s future prospects. With CEO De Wilt recently stating that he is “confident about the future”, and multiple directors buying around the €8 mark, we think the shares have the potential to move higher.

Disclaimer: Neither 2iQ Research GmbH nor its content providers are responsible for any damages or losses arising from any use of this information.

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