Insider Trading Reports: Encana (ECA)

Encana (ECA)

CFO ups stake by 20 percent.

Corey Code, CFO at Encana Corp (ECA), upped his holdings by just under 20 percent recently, buying 10,000 shares. The buy cost just under $40,000, and leaves the company’s head financial honcho with 62,000 shares.

Insider buying data shows considerable insider buying at the company this year, at prices as much as 45 percent higher than the current share price.

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  • There has only been one insider sale this year, which has been dwarfed by insider buying.

    As a player in the exploration and development of oil and natural gas properties, the company’s shares have simply followed energy prices lower in the past few months, especially thanks to the drop in natural gas prices. Shares have declined 45 percent in the past year.

    Action to take: Despite a struggling energy market, the company is faring well. Revenue is up 19 percent in the most recent quarter, and the company sports a 19 percent profit margin, notably high for the energy/commodity space. The company also trades at about half its book value, which is a rough estimate of the value of the oil and natural gas properties it owns, making it look particularly cheap.

    Investors who buy shares up to $4.00 will likely be rewarded in time, possibly from the acquisition of the company by a bigger player.

    Speculators may want to bet on a continued decline, particularly if natural gas prices stay stubbornly low. The July 2020 $3 puts, trading for around $0.30 look attractive in that space.