Top-level insiders such as C-suite executives tend to have a good understanding of their companies’ operations. If they’re buying company stock, it’s a sign that they’re confident about the future and that they expect the share price to rise.
In this report, we are going to highlight some interesting insider buying at Cenovus Energy Inc (CVE:CN). Cenovus Energy is an integrated oil and natural gas company that is headquartered in Calgary, Canada. Its portfolio includes conventional oil and natural gas assets, offshore assets, and oil sands projects. The company is listed on the Toronto Stock Exchange and currently has a market capitalization of CAD 45.2 billion.
Cenovus Energy Inc: Insider Buying
Our insider transaction data shows that on April 7, COO Jonathan McKenzie bought 50,000 CVE shares at a price of CAD $20.89 per share. This trade cost the insider CAD 1,044,500 (approx USD $835,000) and increased his holding to 332,868 shares.
This trade is worth highlighting due to the fact that Mr. McKenzie has made a number of well-timed purchases in the recent past. Our data shows that in December, the insider picked up 25,000 shares at CAD $15.50 per share. Meanwhile, he also snapped up 20,000 shares at CAD $12.11 per share in June 2021. With the CVE share price now sitting above CAD $20, he will have made some nice profits on these trades.
It’s worth noting that Mr. McKenzie has over 20 years of finance and operations experience, mostly in the Canadian oil and gas industry. Previously, he was CFO at Cenovus, and also CFO at Husky Energy – which Cenovus acquired. This background means he is likely to have an excellent understanding of the industry, and his company’s prospects.
Cash Flow Boom
Cenovus Energy is seeing the benefits of high oil prices right now.
In the final quarter of 2021, for example, it generated cash from operations of $2.2 billion, up from 250 million a year earlier. Meanwhile, free funds flow amounted to $1.1 billion for the quarter, up from $91 million in the prior-year quarter.
As a result of the strong cash flows, the company was able to pay down debt, and it ended 2021 with net debt below $9.6 billion. This represented a reduction of more than $1.4 billion from the end of the third quarter, and a reduction of $3.5 billion from the end of 2021, following the acquisition of Husky Energy.
It was also able to double its quarterly dividend and buy back shares. As of February 7, it had repurchased approximately 26 million common shares at a volume weighted price of $16.31 per share.
Looking ahead, management believes the company is well placed to take advantage of opportunities. “We’re well positioned to consider future opportunities to further enhance returns for our shareholders,” said President and CEO Alex Pourbaix in the company’s Q4 results.
In light of these developments, we see the insider buying here as a bullish indicator.