We’ve had to struggle to find ideas the last couple of weeks. There wasn’t such difficulty this week. One company met all our 3Cs and a P criterion.
- Change of Heart – sellers turned buyers
- Cluster – multiple insiders buying simultaneously
- Chunk Buys a.k.a. commitment via large buys
- Past Performance – insiders with a history of being on the right side of the trade
Three directors, the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) bought 76,391 shares of NextEra Energy, Inc. (NEE), combining to invest a total of $5.84 million. That’s the cluster. (1)
NextEra Energy generates, transmits, distributes, and sells electric power to retail and wholesale customers in North America. The company generates electricity through wind, solar, nuclear, and fossil fuel, such as coal and natural gas facilities.
NEE serves approximately 11 million people through approximately 5.6 million customer accounts in the east and lower west coasts of Florida with approximately 76,200 circuit miles of transmission and distribution lines and 673 substations.
The utility’s CEO James Robo helps deliver the remaining Cs and the P. Robo CEO (had to do it) purchased 64,691 shares of NEE for a little less than $5 million. (2) Five million is absolutely chunky. Going back to 2005, the Chief Executive bought NextEra Energy twice for a total of $9.1 million. Meanwhile, on the other side of the tape, Robo sold more than $210.7 million worth of NextEra Energy during the same timeframe.
Last week’s $4.9 million splurge broke a streak of 24 straight sells dating back to July 2015, checking off the change of heart C.
Robo’s other buy was in June 2014 at $26.68. Thirteen months later, he started his string of 24 sells at $101.87. Let’s see, buy at $26.68, sell for more than $100, that’s tremendous performance. It’s almost as good as members of Congress.
As we type, NextEra Energy, Inc. (NEE) trades at $75.46 and has a one-year price target of $92.85. (3) The Floridian utility also pays an annual dividend of $1.54 per share, yielding 2.03%. Dividend investors might consider NEE as a potential holding as the company has lifted its dividend every year since 2006, usually making the announcement in February. In fact, we would not be surprised to see dividend news within a week.
Another letter we could possibly attribute to the CEO is B for bargain hunting. NextEra Energy traded at $94 per share when the current selloff began. It dipped to $70 with insiders jumping in in the mid-$70s. In the past year, NEE traded as high as $93.73 and as low as $75.23.
OVERALL: NextEra Energy, Inc. (NEE) checks off the three Cs, the P, and adds a D and B for dividend and bargain hunting. History suggests NEE shareholders could be in for a dividend hike. Add in CEO James Robo’s trading history and NextEra could be appropriate for investors considering adding utilities to their portfolio. Despite NEE’s recent fall, it’s been far less volatile than the S&P 500 with a five-year beta of just 0.38. (4) (The S&P 500 has a beta of 1, below 1 is considered less volatile and more volatile above 1.)
1 – https://www.secform4.com/insider-trading/753308.htm
2 – https://www.secform4.com/insider-trading/1183254.htm
3 – https://finance.yahoo.com/quote/NEE?p=NEE&.tsrc=fin-srch
4 – https://finance.yahoo.com/quote/NEE/key-statistics?p=NEE