Big insider buying of oil and solar stocks plays into Russia sanctions

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Crude oil storage tanks at a Plains All American Pipeline facility.

Angus Mordant/Bloomberg

Insiders bought shares of two companies whose prospects improved due to Russia’s invasion of Ukraine.

Filings with the Securities and Exchange Commission show significant purchases by persons or entities related to

Plains All American Pipeline LP

(symbol: PAA) and

ReneSola

(FLOOR). Plains is dependent on crude oil, while ReneSola stands to gain as rising energy prices give impetus to solar power projects.

Shares of Plains All American, a master limited partnership that owns and operates energy pipelines and infrastructure, have surged this year in response to war and other factors, including soaring oil prices , a major fire in a Texas Fuel Export Facility, and inflation fears. Stocks have gained 8% so far in 2022, but have fallen 14% in June alone.

“The volatility is incredible,” said Willie Chiang, CEO of Plains All American. June 23 at the JP Morgan Energy, Power & Renewables Conference. “I don’t think we’ve seen the worst of the situation yet, as the sanctions against Russia have not yet fully come into effect. I think people have vastly underestimated the supply chain lines to be able to get Russian crude to end markets. . The significance of this is that… the Permian Basin is really going to be very critical in meeting the demand for crude oil around the world. Later, Chiang added, “We are important in the Permian.

Plains All American is indeed important in the Permian Basin, the oil-rich region of western Texas and southeastern New Mexico. In the first quarter, the company transported an average of 5.2 million barrels of oil per day from the Permian, representing about 73% of its total pipeline volume.

On the same day Chiang spoke at the conference, American Plains All director Kevin McCarthy paid $2 million for 200,000 shares, an average price of $9.81 each, according to a form it filed with the SEC. A vice-president at investment management firm Kayne Anderson Capital Advisors, McCarthy did not respond to a request for comment on his stock purchase.

Shares of solar project developer ReneSola (SOL) have fallen 22% since the start of the year, although they have risen from time to time. Raymond James analyst Pavel Molchanov had been bullish on stocks in January, but his bullish thesis has yet to materialize.

A letter to shareholders the company published on June 7 noted that European power purchase agreement (PPA) prices for solar increased 27.5% year-on-year during the first quarter. “This significant increase in PPA prices is largely due to demand directly attributable to the conflict between Ukraine and Russia which is driving up energy prices across Europe,” ReneSola wrote. “In addition, we are also seeing an increase in the number of retail electricity providers purchasing unused capacity to meet their own decarbonization and sustainability goals and provide green electricity deals to their customers.

Rising electricity prices boosted the company’s project pipeline in Europe, he said.

Shah Capital, a contrarian investment company, paid $5.2 million from June 13 to June 29 for a total of 1.1 million shares, at an average price of $4.50 each. ReneSola CFO Ke Chenwho sits on the board of the solar company, is also a director of Shah Capital.

Shah Capital now owns 12.7 million ReneSola shares and is the third largest shareholder, according to S&P Capital. He did not respond to a request for comment.

“If you think hydrocarbons are going to be around for a long time — and we think they are — crude oil, in particular, is going to be around for decades,” Plains All American’s Chiang said at the conference. “Every outlook and assessment of crude oil demand going forward, even in the most severe scenarios, includes crude oil.” He added: “We haven’t updated our guidelines, but will do so later this year.”

On June 8, Raymond James’ Molchanov wrote, “ReneSola stands out for its substantial European footprint – comprising 70% of the project pipeline in 1Q22 – making it one of the most direct ways for investors to learn about Europe’s energy transition, reinforced by climate policy and the urgency of energy security.

He also argued that Russia’s gas cuts would backfire. “This attempt at geopolitical blackmail will not work – if anything, it has the opposite effect – with solar being one of the ways in which these and other European countries will phase out Russian gas.” he said.

Molchanov reiterated a strong buy rating on ReneSola shares with a target price of $12.50.

Inside Scoop is a regular Barron column that covers the stock trading of corporate executives and board members – the so-called insiders – as well as major shareholders, politicians and other high profile figures. Because of their insider status, these investors are required to disclose stock trades to the Securities and Exchange Commission or other regulatory groups.

Write to Ed Lin at edward.lin@barrons.com and follow @BarronsEdLin.

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