C-Suite Buy of the Week: Executives' Investments Offer Clues to Market Directions

I admit it: I am something of a geek.

I spend a lot of time sitting around reading articles, crunching numbers, and engaging in other research-focused activities.

One of my favorite ways to spend an afternoon is with a game in the background (preferably baseball, but there has to be an offseason), reading the latest academic studies and insights.

Recently, I spent some time with a study on insider buying titled “Are CFOs’ Trades More Informative Than CEOs’ Trades?”

As it turns out, they are.

Everyone focuses on the CEO. After all, he is the top executive who sees everything: all the plans, all the ideas, all the sales figures, everything.

The CEO is the ship’s captain who sees all and theoretically knows all.

Why, then, does the CFO outperform?

Keeping our ship analogy, the CEO may be the captain, but the CFO oversees the engine room and the power plant.

He knows what cash is coming in, where it is going, and how the excess is being spent.

The CFO knows how much they owe and to whom they owe it.

The CFO is also present in every meeting and sees every plan and vision laid out by the CEO and other executives.

He also knows how these plans will impact the business’s financial health.

She is also best positioned to judge how these plans will likely impact the company’s value.

When the Chief Financial Officer buys, it is because the business is trading for less than the ultimate insider view says it is worth.

Here are three companies with recent significant buying by the Chief Financial Officer:

Dorchester Minerals, L.P. DMLP is a master limited partnership that acquires, owns, and manages producing and non-producing mineral, royalty, overriding royalty, net profits, and leasehold interests across the United States.

Its diversified portfolio spans 593 counties and parishes in 28 states, providing exposure to various oil and gas assets.

While the company is currently most active in the Permian and Bakken regions, it also has significant acreage in the Utica Shale and Marcellus Shale regions, which hold enormous amounts of natural gas.

Most energy industry insiders think that natural gas will be in huge demand as the energy source for developing AI to its full potential.

As a royalty trust, Dorchester is paid for every drop of oil and gas produced on the acreage they own. At the current price, the yield on the shares is over 10%.

CFO Leslie Moriyama is clearly a big believer in higher energy prices, as she has recently purchased over $500,000 worth of additional stock in the company.

HA Sustainable Infrastructure Capital, Inc. HASI, formerly known as Hannon Armstrong Sustainable Infrastructure Capital, Inc., is a leading investor in climate solutions, focusing on energy efficiency, renewable energy, and other sustainable infrastructure markets across the United States.

HA Sustainable Infrastructure Capital, Inc. (HASI) maintains a diversified portfolio across three primary markets: Behind-the-Meter (BTM), Grid-Connected (GC), and Fuels, Transport & Nature (FTN). As of June 30, 2024, the portfolio distribution was approximately 47% in BTM, 40% in GC, and 13% in FTN.

The company’s investments encompass various asset classes, including equity, joint ventures, land ownership, lending, and other financing transactions. Notable investments include a structured equity investment in a 2.0 GW portfolio of contracted wind, solar, and solar-plus-storage projects, and a senior debt investment in a portfolio of operating landfill gas-to-renewable natural gas and wastewater treatment biogas-to-renewable natural gas plants.

CFO Marc Pangburn is not buying the death of renewables story, as he recently purchased a six-figure stake in the company.

Centene Corporation CNC, headquartered in St. Louis, Missouri, is a leading managed care company specializing in government-sponsored healthcare programs. Founded in 1984, Centene has become a significant intermediary for government-sponsored and privately insured healthcare plans, offering a comprehensive range of services to individuals and families across the United States. The company’s portfolio includes Medicaid, Medicare Advantage, and Marketplace insurance plans, serving over 28 million members nationwide.

In the third quarter of 2024, Centene reported total revenues of $42.0 billion, marking a 10% increase from the same period in the previous year. This growth was primarily driven by a 22% increase in Marketplace membership and a 49% rise in Medicare Prescription Drug Plans. The company’s adjusted diluted earnings per share stood at $1.62, surpassing analysts’ expectations.

Despite a decline in Medicaid membership due to redeterminations, Centene’s diversified portfolio allowed it to navigate these challenges effectively. The company reaffirmed its full-year adjusted diluted EPS guidance of greater than $6.80, reflecting confidence in its financial outlook.

The stock has sold off this year, finally attracting the interest of CFO Andrew Asher, who recently purchased $1 million worth of the company.