10-year

10-Year Anniversary Promotion (20% off)

Join GuruFocus Premium Membership Now for Only $279/Year

Once a decade discount

Save up to $500 on Global Membership.

Don't Miss It !

Free 7-day Trial
All Articles and Columns »

Compressco Partners: 3 Different Insiders Have Purchased Shares During The Last 30 Days

August 01, 2014 | About:
maarnio

maarnio

2 followers

1 The Company

One oil service company has seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.
  2. The stock is sold by no insiders in the month of intensive purchasing.
  3. At least two purchasers increase their holdings by more than 10%.

Compressco Partners, L.P. (GSJK) provides compression-based production enhancement services for natural gas and oil exploration and production companies.

Common units outstanding (May 12, 2014)

9,279,293

Subordinated units outstanding (May 12, 2014)

6,273,970

Total number of units outstanding (May 12, 2014)

15,553,263

Share price

$22.08

Market cap

$343.4 million

Enterprise value

$365.7 million

P/S

2.9

P/E

19.9

P/B

2.1

Distribution

$1.81 per unit on an annualized basis

Distribution yield

8.2%

Ticker

GSJK

nimetön.png

(Source: Investor presentation)

1.1 History

Compressco was formed in October 2008. The company had its initial public offering in June 2011.

1.2 Business Model

Compressco believes that the value, breadth and quality of services that the company provides to natural gas and oil producers gives it an advantage over its competitors who primarily provide only equipment and maintenance services without ongoing monitoring and optimization services.

nimetön.png

(Source: Investor presentation)

2 Management

The President, Ronald Foster, has over 30 years of energy-related work experience that also includes positions with Wood Group, Halliburton and Dresser. Ronald Foster has served as President since October 31, 2008. Collectively, Compressco’s management team has over 125 years of industry experience.

2.1 Insider Ownership

Compressco’s directors and executive officers own 2.3% of the company.

Here is a table of Compressco’s insider activity during the last 30 days.

Name

Title

Trade Date

Shares Purchased

Public Offering

Current Ownership

Increase InShares

Tetra Technologies (TTI)

10% Owner

July 28

1,391,113

Yes

7,818,370 shares

+21.6%

Bass Wallace

GC

July 25

2,000

Yes

7,000 shares

+40.0%

James Larson

Director

July 25

1,000

Yes

16,083 shares

+6.6%

There have been 1,394,113 shares purchased by insiders during the last 30 days. Two of these three insiders increased their holdings by more than 10%.

Here is a table of Compressco’s insider activity by calendar month.

 

Insider buying / shares

Insider selling / shares

July 2014

1,394,113

0

June 2014

0

0

May 2014

0

0

April 2014

0

0

March 2014

0

0

February 2014

0

0

January 2014

0

0

December 2013

0

0

November 2013

0

0

October 2013

0

0

September 2013

0

0

August 2013

0

0

July 2013

0

0

June 2013

0

0

May 2013

0

0

April 2013

0

0

March 2013

0

0

February 2013

0

0

January 2013

0

0

There have been 1,394,113 shares purchased and there have been zero shares sold by insiders since January 2013. The month of July 2014 has seen all of the insider buying.

2.2 Compensation

Here is a table of the management’s compensation during the last three years.

nimetön.png

(Source: Annual report)

The management’s total compensation was highest in 2011.

3 Financial Summary

3.1 Current Situation

Compressco reported the first-quarter financial results on May 8 with the following highlights:

Revenue

$29.8 million

Net income

$4.6 million

Cash

$12.6 million

Debt

$32.2 million

nimetön.png

(Source: Investor presentation)

The net income grew 1.8% compared to the first quarter of 2013.

On July 20 Compressco announced that it had entered into a definitive agreement to purchase all the outstanding shares of Compressor Systems for $825 million in cash.

To fund this acquisition, Compressco announced on July 24 the pricing of an underwritten public offering of 15,280,000 common units at a public offering price of $23.50 per unit and on July 29 Compressco announced that it had priced its previously announced private offering of $350 million in aggregate principal amount of senior notes.

3.2 Historical Developments

Here is a table of Compressco’s revenue and earnings since 2011.

Year

2011

2012

2013

Revenue ($ millions)

95.2

108.6

121.3

Net income / loss ($ millions)

+7.3

+16.3

+17.6

EPS

+0.45

+1.04

+1.11

The revenue has grown 27.4% since 2011.

4 Shares

Here is a table of Compressco’s number of shares since 2011.

Year

2011

2012

2013

Number of units (millions)

15.3

15.4

15.5

Compressco’s number of units have grown 1.3% since 2011, but revenue has grown 27.4%.

5 Outlook

Compressco’s second-quarter guidance is as follows:

Revenue

$31-$33 million

Net income

$4.7-$5.1 million

EBITDA

$9.0-$9.6 million

Adjusted EBITDA

$10-$11 million

nimetön.png

(Source: Prospectus)

6 Risks

Compressco depends on domestic and international demand and production of natural gas, oil and natural gas liquids. Reduction in this demand or production could adversely affect the demand or the prices Compressco charges for its services and products.

7 Conclusion

There have been three different insiders buying Compressco and there have not been any insiders selling Compressco during the last 30 days. The three insiders purchased their shares at $23.50. I believe Compressco could be a good pick below $23.50 based on the intensive insider buying.

Disclosure: The author has no positions in any stocks mentioned.

  • CEO Buys, CFO Buys: Stocks that are bought by their CEO/CFOs.
  • Insider Cluster Buys: Stocks that multiple company officers and directors have bought.
  • Double Buys:: Companies that both Gurus and Insiders are buying
  • Triple Buys: Companies that both Gurus and Insiders are buying, and Company is buying back.

» Take a Free Trial of Premium Membership

About the author:

maarnio
I have 15 years of investing experience. I have traded stocks, commodities and Forex markets.

Rating: 5.0/5 (1 vote)

Voters:

Comments

Please leave your comment:


Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK