Insider Purchases & Buybacks: HOC

Today, I am going to discuss a petroleum refiner that has recently seen some insider purchases, named Holly Corp (HOC - commentary - Cramer's Take). (On Stockpickr, you can see the rest of the insider trades and buybacks.)

Holly's board recently authorized an additional $200 million to the company's existing repurchase plan. Prior to the latest approval, the Dallas, Texas-based company had about $14 million remaining in the program. The petroleum refiner, which has been aggressively buying back its shares, had previously increased the authorization in August last year by $100 million to $400 million. Since May 2005, Holly has repurchased approximately $486 million shares.

The stock is not only undergoing a companywide buyback, insiders are also snapping up shares. Company director Thomas Matthews bought 10,000 shares of Holly for $47.50 a share in December. Earlier in November, CEO Matthew Clifton purchased 15,000 shares at a price range between $47.58 and $47.65.

The company's revenue rose by 3% in the third quarter to $1.21 billion. Net income missed Wall Street expectations, declining 26% to $58.1 million, or $1.04 a share. Refining margins contracted during the quarter, adversely impacting profits. Holly also suffered a loss in production volumes due to downtime at the Navajo refinery.

The shares suffered an onslaught following the earnings report. In fact, the stock has traded down more than 20% since September. Analyst Mohan Mandrekar of UBS raised his rating from neutral to buy, saying that the pressure on Holly's shares appeared excessive. Just yesterday, Johnson Rice upgraded it from an Equal Weight to Overweight.

The company has been acquiring assets and expanding its feedstock and refining capacity. Holly's balance sheet is strong, with no long-term debt, and the company is likely to continue to invest in growth.

Another good indicator of value in a company's shares is to see what investment funds own the company. There are several funds that own Holly, and you can see the list" on Stockpickr.

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At the time of publication, Raznick had no positions in the stocks mentioned, although positions may change at any time.

Jason Raznick is president of Easy Stock Alerts and has been involved with the capital markets for several years. He has worked for Merrill Lynch, Dynamis and Tricap Holdings, a joint venture with Fortress Investment Group. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Raznick appreciates your feedback; click here to send him an email.