Whenever multiple insiders within a single company all agree to buy a significant equity stake in said firm over a short amount of time, outside investors begin to take notice. Such is the case with PHX Energy Services Corp. (TSX:PHX), a Canada-based horizontal and directional drilling services company providing a range of drilling services to oil producers in North America, but centered in the Western Provinces of Canada.
This company, along with most of its competitors in the drilling space, have seen valuations slashed in recent months as the market has continued to re-assess the long-term profitability of the services side of the commodity sector.
The line of thinking is that if the underlying commodities sector continues to soften, capital expenditure budgets will continue to shrink to the point where drilling companies will have no work to do and will be without a revenue and profit stream moving forward.
While drilling volumes overall have contracted, the overall reduction in volumes has not, in my opinion, justified the drop in the share prices of drillers such as PHX.
The fact that most of the company’s insiders have continued to buy heavily as the company’s share price has continued to decline is a pretty decent indication to most investors with limited knowledge of the industry that this is one sector investors should look to for value.
Invest wisely, my friends.
