Scott Martin, a director at Kimbell Royalty Partners (KRP), recently bought 30,000 shares. The buy increased his stake by 49 percent, and came to a total cost of $460,885.
This is the first insider buy since December 2022, when another company director bought 100,000 in shares. Otherwise, there have been a few insider sales, one from a third company director, and one from the company’s Controller.
Overall, Kimbell insiders own 5.4 percent of shares.
The oil and gas royalty company is down 2 percent over the last year, as declining energy prices have weighed on returns. Earnings are down 61 percent, and revenues slid 5 percent.
Even with that drop, shares still trade at 9 times forward earnings, and at about 1.2 times their book value, down from over 2 times their book value a year ago.
As a royalty investment company structured as a partnership, cash flows are paid out to shareholders, resulting in a big yield. Currently, Kimbell yields 13.2 percent.
Action to take: Investors looking for current income may like shares here. The current payout is higher than earnings, but rising energy prices could lead to rising earnings sufficient to cover the dividend.
For traders, the April 2024 $15 call are slightly in-the-money. Last going for about $0.85, they could see mid-double-digit returns on a quick move higher for shares. Traders may want to take profits quickly on a big rally day for shares.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any companies mentioned in this article.