Insiders Fuel Up on Ultra Petroleum

09/22/2017 6:00 am EST

Focus: ENERGY

Stephen Biggar

Director, Product Strategy, Argus Research Corporation

Short-term insider sentiment (one-week) has moved into neutral territory from bullish territory last week. That said, when combined with the previous two-weeks (when short term sentiment was broadly bullish), the current outlook remains positive, says Stephen Biggar, editor of Argus Research.


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Indeed, the past three weeks compare quite favorably to the clearly cautious insider sentiment that was in place from May right up until late August.

The modest cooling this week is not a surprise as the broad market averages bounced back last week from an earlier sell-off driven mostly by geopolitical fears.

Of course, those geopolitical fears can come and go with remarkable frequency, and are a wildcard that insiders, like any group of investors, are unable to control.


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Meanwhile, we have seen a bout of purchasing at Ultra Petroleum (UPL), where beneficial owner Fir Tree Inc. purchased a total of 5,918,620 shares between August 21st and 31st — increasing their total reported holdings to 36,279,550 shares.

Recent purchases also were the first direct open-market buying of UPL by Fir Tree since the filing of SEC Form-3 on April 12th.

The UPL stock hit a low of $0.31 per share in April of 2016 and remained there until December 1st of 2016. The shares then spiked to a $16.04 by March of 2017, but have since fallen to $8.13.

The spike in the share price was the result of the voluntary filing of a petition for reorganization under Chapter 11. That was followed by positive 2017 production and EBITDA guidance and news that the Bankruptcy Court issued an order confirming the reorganization plan.

Second-quarter results were positive, as revenue rose 45%; GAAP net income was $499 million or $2.76 compared to $14 million or $0.17 per diluted share in the year ago period; adjusted net income was $51 million or $0.28 per share compared to $37 million or $0.47 per share in the year-ago period; and adjusted EBITDA was $141.9 million compared to $83.9 million in the year-ago period.

According to Bloomberg, three analysts cover the company and all have a buy rating on the shares — with an average target price of $15.

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