Phillip Barrington, a director at Phillips 66 Partners (PSXP), recently added 15,000 shares to his stake. The buy increased his holdings by a significant 55 percent to over 42,250 shares. The buy cost just over $325,000.
Barrington was also the last insider to buy back in March of this year, also picking up 15,000 shares then. Insiders at the company have only been buyers for the past four years, at price as much as 65 percent higher from current prices.
The oil and gas midstream company has understandably been a poor performer in the past year, with a 60 percent drop in shares. Nevertheless, the company has managed to maintain a profit, and trades at an attractive six times earnings. Best of all? Insiders own a whopping 74% of shares.
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Action to take: Structured as a partnership, the best way to profit may be from buying shares. The company currently pays a $3.50 dividend, about 15 percent at current levels. That’s down from years past, so it’s not the value trap that it may appear to be at first glance.
For traders, the March 2021 $25 calls are a bet on shares moving somewhat higher in the next few months. While there may not be a monster rally given the fundamentals in energy, the option is inexpensive at around $1.60 per contract right now.