Stock Analysis

Don't Ignore The Fact That This Insider Just Sold Some Shares In Callon Petroleum Company (NYSE:CPE)

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NYSE:CPE
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Anyone interested in Callon Petroleum Company (NYSE:CPE) should probably be aware that the VP & Chief Accounting Officer, Gregory Conaway, recently divested US$395k worth of shares in the company, at an average price of US$39.52 each. That sale was 23% of their holding, so it does make us raise an eyebrow.

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Callon Petroleum Insider Transactions Over The Last Year

In fact, the recent sale by Gregory Conaway was the biggest sale of Callon Petroleum shares made by an insider individual in the last twelve months, according to our records. That means that an insider was selling shares at around the current price of US$37.58. While we don't usually like to see insider selling, it's more concerning if the sales take place at a lower price. We note that this sale took place at around the current price, so it isn't a major concern, though it's hardly a good sign.

The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume
NYSE:CPE Insider Trading Volume March 20th 2021

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Insider Ownership of Callon Petroleum

Looking at the total insider shareholdings in a company can help to inform your view of whether they are well aligned with common shareholders. Usually, the higher the insider ownership, the more likely it is that insiders will be incentivised to build the company for the long term. It appears that Callon Petroleum insiders own 2.4% of the company, worth about US$41m. We've certainly seen higher levels of insider ownership elsewhere, but these holdings are enough to suggest alignment between insiders and the other shareholders.

What Might The Insider Transactions At Callon Petroleum Tell Us?

An insider sold Callon Petroleum shares recently, but they didn't buy any. And our longer term analysis of insider transactions didn't bring confidence, either. Insiders own shares, but we're still pretty cautious, given the history of sales. We're in no rush to buy! So these insider transactions can help us build a thesis about the stock, but it's also worthwhile knowing the risks facing this company. Case in point: We've spotted 3 warning signs for Callon Petroleum you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

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What are the risks and opportunities for Callon Petroleum?

Callon Petroleum Company, an independent oil and natural gas company, focuses on the acquisition, exploration, and development of oil and natural gas properties in Permian Basin in West Texas.

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Rewards

  • Trading at 42.2% below our estimate of its fair value

  • Became profitable this year

Risks

  • Earnings are forecast to decline by an average of 11.5% per year for the next 3 years

  • High level of non-cash earnings

  • Has a high level of debt

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