How Hi-Crush Made Us 30% in Less Than 4 Hours
Sometimes tracking insider trades works out faster than tracking others. That’s why, when I see confirmed cluster buying (more than one executive buying shares in the company on the open market), I have to move fast on my research so I can put out an alert.
In the case of Hi-Crush (NYSE: HCR), I saw three large insider purchases last Thursday and Friday. Hi-Crush is a supplier of fracking sand for the oil and gas industry. The company has seen its fortunes sour a bit with the decline in oil and gas prices – but the story goes deeper.
My research revealed several things:
- Hi-Crush shares were heading lower well before the decline in oil and gas prices, and that implied the company was ahead of the curve. Demand was low, and prices fell. Hi-Crush had to eliminate its dividend, and that caused an exodus out of the shares. Prices fell from over $16 to less than $2.
- Hi-Crush was in great shape financially – the company had lots of cash and not much debt. It was hard to justify the price plunge other than from panicky investors.
- The oil and gas business can turn on a dime, and investors are ignoring that.
- Three large purchases in a row by officers of the company at levels below $1.80 told me that insiders believed the bottom was in place.
On Friday afternoon, I recommended War Room members jump into Hi-Crush at around $1.78. By Monday morning I put out a sell alert for the position, presenting a chance for more than 30% gains – on a stock trade!
We could have waited a couple more hours and seen gains of 40%. But by the end of the day, our move was justified, as the shares pulled back.
Action Plan: Going forward, we still have Hi-Crush on our screen in The War Room. Why? Because we know that the bottom for the shares has been put in, and we will look for a panic-selling day in the market to reestablish our position. You will want to be in The War Room and ready to roll when it happens!