2iQ Insider Brief: Matador Resources (MTDR:US) Avanos Medical INC(AVNS:US) BlackRock TCP Capital (TCPC:US)

Kaloyan Kolev 10 December 2018

Matador Resources (MTDR: US) 

12-month performance: -22%
Insider activity: Bullish
Buying pattern: Purchases from a large number of directors including CEO and CFO
Recent news: Solid Q3 earnings

 

Matador Resources is an independent energy company focused on the exploration, development, production and acquisition of oil and natural gas resources in the US. Its current operations are focused primarily on the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. The company also conducts midstream operations through its midstream joint venture, San Mateo Midstream, LLC. The stock is listed on the New York Stock Exchange and currently has a market capitalisation of $2.6 billion.

 

Shares in Matador Resources fell heavily in October and November, with the significant decline in the oil price being the main driver for the fall. Between early October and late November, the price of WTI crude oil fell from $76/bbl to just $50/bbl, and as a result, investors dumped oil stocks, with Matador’s share price falling from $34 to $22. Yet with the company recently reporting solid Q3 results that beat expectations, and the oil price showing signs of a rebound, could now be the time to go long here?

 Matador Resources

Source: 2iQ Research

Looking at recent insider transaction activity at Matador Resources, we think the stock could be poised for a rebound. Since mid-November, 16 different directors have taken advantage of the lower share price and purchased shares in the company, and we interpret this buying activity as an extremely bullish signal. Those buying have included top-level insiders such as Chairman and CEO Joseph Foran, who recently bought 4,000 shares, and CFO David Lancaster, who acquired an extra 2,500 shares. With so many directors purchasing shares in Matador, we think the stock is worth watching closely in the near term.

 

Avanos Medical Inc (AVNS: US) 

12-month performance: -2%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO and CFO
Recent news: Q3 sales missed estimates

 

Avanos Medical is a medical device company that is focused on creating innovative healthcare solutions. The group offers solutions for acute pain management, digestive health, respiratory health, and IV therapy and its brands can be found in over 90 countries worldwide. The stock is listed on the New York Stock Exchange and currently has a market capitalisation of $2.2 billion.

 

After rising significantly in the first half of 2018, Avanos shares have pulled back sharply since mid-September. Not only has the stock been dragged lower by general market weakness, but investors also dumped the stock after Q3 sales missed Wall Street’s expectations in early November, and the company lowered its full-year organic sales growth target. However, the group did reaffirm its full-year adjusted diluted EPS guidance, and CEO Joe Woody advised that the company remains confident about the long-term outlook. With that in mind, is it possible that the recent share price fall may have provided a buying opportunity? 

 AVANOS

Source: 2iq Research

Looking at recent insider transactions here, we think the stock looks interesting after the recent share price fall. We say this because in the last few weeks, we have observed purchases from several top-level directors, including CEO Woody and CFO Steven Voskuil, and we interpret this buying activity as a bullish signal. What’s also interesting about these particular purchases is that both Woody and Voskuil have turned from sellers of the stock to buyers, which suggests that they see more value in the stock now. Given this pattern of bullish director buying, we believe the stock could be worth a closer look right now.

 

BlackRock TCP Capital (TCPC: US) 

12-month performance: -12%
Insider activity: Bullish
Buying pattern: Purchases from multiple directors including CEO, CFO and COO
Recent news: Solid Q3 results

 

BlackRock TCP Capital Corp. is an externally-managed specialty investment management company focused on middle-market lending. The company primarily invests in debt securities of private, middle-market companies with enterprise values of between $100 million and $1.5 billion, and its aim is to achieve high total returns through current income and capital appreciation, while also focusing on capital preservation. The stock is listed on the NASDAQ and currently has a market capitalisation of $822 million.

 

Shares in TCPC have trended downward over the last two years, falling from around $17 to $14. Recently, investors have had concerns over the possibility of a potential merger with BlackRock Capital Investment, as well as concerns over NAV declines. Yet recent Q3 results were solid, and the company covered its dividend for the 26th quarter in a row. With the stock’s yield currently above 10%, is now the time to buy the stock for income?

 BlackRock

Source: 2iQ Research

Analysing recent insider transaction activity at BlackRock TCP Capital, we think the outlook for the stock is favourable. This is due to the fact that in November, five top-level directors purchased shares in the investment management company, which suggests that management is confident about the future. Those buying included CEO Howard Levkowitz, CFO Paul Davis, and COO Rajneesh Vig, who all purchased a significant amount of shares. Given that multiple directors are buying, we think the stock, and its 10% yield, look attractive right now.

 

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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