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Tuesday December 11, 2007
'Massive' insider buys boost McMoRan (MMR)
In his Commodity Trend Alert he notes, “You don’t buy several million dollar’s worth of stock if you think the company is heading down the tubes.” The advisor concludes, “It’s time to play with the big boys in the Gulf of Mexico!” “What really peaked my interest was the amount purchased in relation to this company’s small market value; when I see this sort of buying, I’m immediately interested. “McMoRan Exploration Co. engages in the exploration, development, and production of oil and natural gas offshore in the Gulf of Mexico and onshore in the Gulf Coast region. 
“As of December 31, 2006, the company owned or controlled interests in approximately 400 oil and gas leases in the Gulf of Mexico, and onshore in Louisiana and Texas covering approximately 370,000 gross acres. “MMR trades at a multi-year low, is down a hard 23% over the last 12 months and posted a huge third quarter loss for the September period. Usually, this sort of financial bleeding would leave me running for the door. “But there’s something going on at MMR this month and based on my stock-screen analysis and contrarian sentiment indicator, this depressed oil and gas exploration concern is worth your time, effort and of course, investment dollars. “The average insider purchase in the United States is just $50,000. That’s a pretty small amount of money if you’re an executive or director of a publicly-traded company. But that’s the figure. “At MMR, four insiders, including the company’s co-CEO bought a total $8,886,000 worth of company stock earlier this month at an average price of $12.40 per share, or 7.3% above the current price of $11.49. “The co-CEO alone purchased $1.3 million dollars’ worth of MMR on November 2 -- a few days following the company’s poor Q3 earnings were released. You can actually see the big volume spike on the MMR chart above for that day. “What is the catalyst? On November 14, MMR successfully financed a $300 million dollar senior note issue primarily for the financing of its recent takeover of Newfield Exploration, which will significantly boost its Gulf of Mexico oil and gas revenues. “I think this is the reason why executives and directors at this small energy company have gone mad-dash crazy with an $8.9 million dollar insider buying binge this month. “Despite a universe of hundreds of natural resource stocks out there, none offer this sort of compelling insider buying – none. That’s especially the case right now in the oil and gas sector, where soaring costs have seriously hurt earnings for most companies, including MMR. “You don’t buy several million dollar’s worth of stock if you think the company is heading down the tubes. MMR insiders all clustered at the same time and at the same price in a span of just a few days; that tells me earnings are going to turn around in a big way over the next few quarters. It also means we’re buying.” 
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News Flash
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“There’s not much to like about a company that’s struggling to make money; but in reviewing