Oil and gas services equipment stocks have fallen out of favour with
investors, but certainly not with the executives and directors who work within
Insider buying in those companies is remarkably high, jumping over the 1000
per cent level late last month, according to INK Research. That means there
were more than 10 stocks in the group with key insider buying for every one with
The indicator has come off a little over the last few days, now at 600 per
cent. But that’s still a very high number and worth noting given that corporate
insiders, on average, tend to make better calls on buying and selling shares
than individual investors.
The oil and gas equipment and services subindex of the TSX has tumbled in
recent weeks. Trading today near 1,866, it is just barely above this summer’s
lows near 1,800 and more than 13 per cent off its late September highs.
Corporate insiders clearly are going bargain hunting.
“Investors have been bailing on the stocks due to concerns over capital
spending by exploration companies,” noted Ted Dixon, CEO of INK Research.
He believes these concerns are probably short sighted.
“The ability to bring unconventional drilling targets into production will
require a team effort between the property developers and the technical hired
hands. The race to get more barrels out of the ground is heating up, not growing
“Unless Canadian oil and gas service companies have lost some sort of
technological edge that we are unaware of, the prospects for the group may be
more upbeat than investors assume,” he said.
The energy sector indicator, which encompasses much more than just the oil
and gas services stocks, continues to be high as well. At 309 per cent, there is
more than three stocks with key insider buying for ever one with selling.
Energy firms with the most insider buying, by value, over the past 60 days
are Crescent Point Energy, Penn West Petroleum, Pengrowth Energy and Poseidon
Overall, INK's sentiment indicator for all TSX-listed stocks is at 152.3 per
cent and has been trending up in recent weeks.
The indicators are derived by taking the number of stocks with buy-only
transactions over the last 60 days, and dividing that with the number of
sell-only transactions. The indicators ignore stocks that have both buying and
selling in an effort to give a more accurate reading.