Boardroom buyers fell to a monthly low based on the number of companies with purchase records. Only 60 publicly traded companies' executives and directors opened their checkbooks to buy their stock last week.
With so few companies to choose from, it is slim pickings for this week's insider buy candidate. There just wasn't much meat on the bone.
But, we'll take a look at CAMAC Energy Inc (NYSEMKT:CAK). Since the odds are you haven't heard of CAK, the company is an independent oil and gas exploration and production company focused on energy resources in Africa. Its asset portfolio consists of nine production and exploration licenses in four countries covering an area of 43,000 square kilometers (approximately 10 million acres), including existing production and other projects offshore Nigeria, as well as exploration licenses with hydrocarbon potential onshore and offshore Kenya, offshore Gambia, and offshore Ghana.
On April 9, 2014, Founder, Executive Chairman, Chief Executive Officer, Member of Nominating & Corporation Governance Committee and Director of CAMAC Energy Holdings Ltd. (How does he fit all that on his business card?), Dr. Kase Lukman Lawal bought 25,000 shares of CAK at $0.82 per share for a total investment of $20,500. The buy was in addition to a host of automatic purchases, of which there will be a lot more.
The last non-automatic purchase by the Doctor was in November 2012 at $0.65 per share - OK performance.
As we mentioned already, more automatic buy are coming. On April 1, 2014, it was announced, the CEO "has adopted a trading plan in accordance with the guidelines specified by Rule 10b5-1 under the Securities Exchange Act of 1934, to purchase up to two million shares in the open market at prevailing market prices and subject to conditions and restrictions relating to volume, price and timing."
Lawal says, "it is my responsibility to demonstrate management's commitment, leadership, and continued belief in the long-term prospects of this company. We are in a stronger position today than we've ever been in the history of CAMAC Energy. As we continue to develop the Oyo Field offshore Nigeria and generate strong cash flow, further our development and exploration prospects in Ghana, Kenya, and Gambia, and continue to pursue opportunities and partnerships, I am confident we will continue to create value for our shareholders."
Let's take a shot at determining just how much shareholder value could be created. From what we have been able to gather online, the company's long-term goal is the production of 7,000 barrels of oil per day. We'll use $100 per barrel, which works out to annual revenue of $2.555 billion. Since nothing works perfectly, we'll guesstimate 85% efficiency and target eventual, potential revenue of $2.172 billion.
Management believes full drilling capacity will be online by the end of 2016. So we aren't projecting somewhere out to the Jetsons.
Most of the brand-name oil producers trade around 1.1 times sales. If we apply that price-to-sales (P/S) multiple to CAMAC Energy, a target price of $1.25 or 76.61% higher than the stock trades as we type.
Overall: iStock views speculative plays like CAMAC Energy Inc (NYSEMKT:CAK) as an option minus an expiration date. Aggressive investors stand to cash in – perhaps to a much larger degree than our price-target – but there will probably be plenty of ups and downs along the way.
CAK is what iStock terms a shoebox stock. If high risk/high reward stocks are your thing, put the certificates in a shoebox, open it every month or so to see how the stock is doing, and forget about it in between.
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