Insiders Like Oiltanking Partners LP (OILT) Although Hedge Funds Don’t

On Monday, Jan. 6th, Anne-Marie Ainsworth, President, Chief Executive Officer and Board Director at Oiltanking Partners LP (NYSE:OILT) filed a Form 4 report with the U.S. Securities and Exchange Commission, declaring a purchase* of the company’s stock. The insider acquired 1,000 shares at prices ranging from $62.20 to $62.46 per common unit (the weighted average price was of $62.37 per share).

Oiltanking Partners LP (NYSE:OILT) is a crude oil, refined petroleum products and liquefied petroleum gas terminaling, storage and transportation company with a market capitalization of approximately $2.4 billion. Its stock trades at only 8.9 times the firm’s trailing earnings, way below the industry average of 34.6x. However, its margins and returns are amongst the highest in the oil and gas midstream industry. In addition, analysts expect Oiltanking Partners LP (NYSE:OILT) to deliver average annual EPS growth rates around 35% for the next five years, double its industry’s mean. Meanwhile, stockholders will receive a dividend yield of about 2.86% of the current stock price (and this percentage is expected to continue to rise, as it has consistently since 2011). In this context, it is not difficult to understand Ainsworth’s purchase.

The company’s President, Chief Executive Officer and Board Director, owns 13,000 shares of Oiltanking Partners LP (NYSE:OILT) after the reported transactions. Her holdings are worth more than $800,000 at the current stock price.

I should highlight that Ainsworth’s last purchase is not the first one this year. Au contraire, she entered a unit purchase plan, which meant that she started increasing her participation in the company every month since Feb. 2013, augmenting her holdings by more than 10,000 shares.

Another insider betting on the company is L. David Griffis, Board Director, who entered this plan even earlier, in Jan. 2012, and has been increasing his position in the stock ever since.

Although insiders seem to feel confident about Oiltanking Partners LP (NYSE:OILT)’s future, hedge funds don’t. The only major fund betting on the company, Jim Simons’ Renaissance Technologies reduced its stake by 48% a few months ago. However, the stock is up more than 25% since its sale, so further analysis is certainly needed.

* “The transaction reported on this Form 4 was executed pursuant to a unit purchase plan in compliance with Rule 10b5-1 under the Securities Exchange Act of 1934” (Sec.gov).

Disclosure: Javier Hasse holds no position in any stocks mentioned