By Michael Brush, MarketWatch
Insider buy range: $21.20 to $31.37.
The coronavirus is going to cause such a long-lasting economic slowdown, it will crush energy demand — and kill energy stocks, too. That’s what the bears say. A long-time energy sector veteran, Richard Kinder, obviously disagrees.
During the current spiral in the market, the Kinder Morgan /zigman2/quotes/208455654/composite KMI -0.67% founder has purchased $25.4 million worth of stock. I weight founder purchases higher, since founders presumably know more about their sectors.
CEO Steven Kean has also made a rare purchase of $93,000 worth. This is relatively small, but he hasn’t bought stock in five years. So it stands out as a signal. Kinder Morgan has a large 6.2% dividend yield, and the insiders are telling us there’s a good chance for capital appreciation, too.
Insider buy range: $15.51 to $20.72.
This is the closest insiders come to buying “defensive” names. Newell Brands has defensive characteristics since it sells consumer staples such as cleaning products and food-storage containers. Those are things people need so they keep buying them in recessions.
But Newell Brands /zigman2/quotes/209507510/composite NWL -0.28% also sells discretionary items like Oster, Sunbeam and Mr. Coffee appliances, which consumers cut back on during hard times. So it’s an economically sensitive company too. Intriguingly, this company sells Rubbermaid gloves, which are popular as cleaning efforts step up due to the virus.
Activist investor Carl Icahn recently bought a huge amount , or $34.6 million worth. And director Brett Icahn recently bought $5.1 million worth. Those are also outside investor purchases, which some insider analysts dismiss out of hand . I think this is too blunt a tool in insider analysis.
After all, ignoring all outside owners means you block purchases by Berkshire Hathaway /zigman2/quotes/200060694/composite BRK.B -0.68% . Do you really want to dismiss Warren Buffett? Anyone who ignores Carl Icahn is missing out — he’s a savvy investor. Icahn is an activist investor here, lobbying for reforms he thinks will make the stock go up.
There’s also a $37,000 purchase by Robert Schmidt. That’s small, but as chief accounting officer he’s a line manager. Their buys often count more than those of directors, who are often more removed from the day-to-day business. Newell features a 6.7% dividend yield.
Insider buy range: $13.15 to $16.39.
In the age of coronavirus, no one wants to travel anymore. Bad news for TripAdvisor /zigman2/quotes/206118480/composite TRIP +0.92% , which helps travelers book cruises, flights, hotels and restaurants online. So dump the stock, right? CEO Stephen Kaufer clearly disagrees. He just took down $966,000 worth of shares. It’s pretty unusual to see insider purchases this big. CEO buys count for more, among insiders. Plus, this is a rare buy for Kaufer. He hasn’t purchased in six years. There’s no yield here.
Insider buy price: $21.73.
Since the economy will tank because of coronavirus, companies that sell basic materials and parts used in industry will run into serious problems. Especially if — like Hexcel /zigman2/quotes/209574944/composite HXL -0.10% — they sell to commercial aircraft makers, the auto industry, and companies that sell discretionary recreational products like boats, skis, snowboards, surfboards, bikes and hockey sticks. Sell this name now!
The CEO doesn’t think so. Nick Stanage is betting big that the bears are wrong. He just bought $2 million worth of stock, another mega purchase. Stanage has a good record as a buyer and a seller. He was a heavy seller in early September at $86 and now he is buying back much lower. Hexcel pays a 1.1% yield.
Insider buy price: $45.15 to $56.
Unlike gold or silver, lowly copper is used a lot more in industry than jewelry. So in a coronavirus slowdown, copper demand will plummet. And so will the stocks of companies that produce it. So goes the bear case for Freeport-McMoRan /zigman2/quotes/200215692/composite FCX -0.08% . Insiders here think this view is a joke. CEO Richard Adkerson just bought $2.5 million worth of stock and CFO Kathleen Quirk purchased $863,000 worth. Director John Stephens also just bought around $500,000 worth. There’s a 2.2% dividend yield.
Insider buy range: $10.02 to $11.19.
At the time of publication, Michael Brush had no positions in any stocks mentioned in this column. Brush has suggested SIX, KMI and FCX in his stock newsletter Brush Up on Stocks. Brush is a Manhattan-based financial writer who has covered business for the New York Times and The Economist Group, and he attended Columbia Business School.