Decent Yielding Companies That CEOs Are Buying

Anh is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

 Peter Lynch, a very famous fund manager, has a brilliant quote on insider actions: “Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise." Thus, investors would be much better off tracking insiders’ actions to see whether they are bullish or bearish on the company they are currently managing. Investment opportunities mean insiders, especially the CFO, are bullish about the companies. Furthermore, it is much better when the business employs a reasonable amount of leverage and pays decent dividends to shareholders. That is why I am screening with four main criteria: (1) market capitalization larger than $500 million, (2) recent CFO purchases, (3) debt to equity ratio is max 1x, and (4) the dividend yield is larger than 1%. Here are the only 3 results: 

Bristow Group (NYSE: BRS) is the leader in helicopter services for the offshore energy industry with major operations in the North Sea, Nigeria, and the US.  The majority of revenue and operating income were generated outside the US, around 82% and 93% respectively. As expected, the business of Bristow would require a lot of fixed assets, thus the depreciation and capital expenditure are not small numbers. Interestingly, the company has financed its assets via a reasonable capital structure. As of September, it had $1.57 billion in total stockholders’ equity, $716 million in long-term debt, and $348 million in cash. The net Property, Plant and Equipment item (after accumulated depreciation) was recorded at nearly $2.15 billion on the balance sheet. Thus, the D/E ratio is only 0.5x. Currently, the company is paying only an 1.4% dividend yield. Since the beginning of 2012, Johnathan Baliff, the CFO has purchased 1,000 shares at the price of $52.48 per share. However, during the same time, an independent director has exercised his options and sells the shares in the market place. Marc Duncan, Senior VP, Commercial has also exited 6,000 shares at around $52.50 per share.

Oriental Financial Group (NYSE: OFG) is the financial holding company with 30 centers in Puerto Rico, and considered to be the fourth largest bank in Puerto Rico. In 2011, the majority of its deposits were in certificates of deposit, $1.16 billion, out of nearly $2.4 billion in total deposits. For the trailing twelve month period, Oriental only generated 3.88% return on equity and 0.38% return on assets. As of September, it booked $772 million in stockholders’ equity, $511 million in cash, and only $285 million in long-term debt, thus the D/E ratio was only 0.5x. Oriental Financial is paying an 1.7% dividend yield to shareholders. On December 12, Ganesh Kumar, the company’s EVP and CFO bought 2,645 shares at the price of $12.37 per share. Since November, other insiders have also been accumulating shares. 

NGL Energy Partners (NYSE: NGL) is the 2 year-old limited partnership to operate propane business including midstream; wholesale supply and marketing; and retail propane. As of fiscal 2012, the company had around 224,000 retail propane customers, 14,000 retail distillate customers, 420 wholesale supply and 195 midstream customers. Michael Krimbill, the CFO, CEO and Director, has recently purchased 150,000 units at $21.50 - $22.40 per unit, with the total transaction worth of more than $3.3 million. At the end of November, Michael Krimbill has also purchased 40,000 units for total $930.8 million. So it seems that he is quite bullish about the partnership he is managing. Currently, the D/E ratio of the company is around 0.7x. NGL is currently paying to shareholders very juice dividend, of 7% yield on the current share price. 

Foolish Bottom Line

Among the three, NGL Energy Partners’s CFO and CEO, is the busiest in buying back large partnership units for his own portfolio. His large commitment in the company would recently represent the potential upswing in the near future. All three companies are reasonably financed, offering decent dividend yields to investors, and the CFOs have bought shares. Investors need to dig deeper into each situation to find the suitable stocks for their own portfolios.  


hoangquocanh has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

 

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