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Insider Trade Spotlight: Centerpoint (CNP)

by | May 16, 2021

Centerpoint (CNP) with a rare open market buy on 5/13 from President and CEO David Lesar of 50,000 shares at $23.58, a more than $1.175M buy. This follows the CFO buying $240,000 in stock on 5/11 at $24.06 and in March a director adding $1M in stock at $19.84. CNP is nearing new 1-year highs with room above $25.50 back to $30 and a high-volume node from 2019. The $13.74B utility trades 17.3X earnings, 1.85X sales, and 13.8X cash with a 2.55% yield. CNP is a leading electric utility in the US with natural gas and midstream operations too. It has been a busy 12 months for the company which saw its CEO leave in early 2020 after their rate hike request was rejected by the Texas PUC. In May 2020, activist Elliott Management and Fidelity invested $1.4B in the company through $725M in convertible preferred shares and $675M in common shares. The firms hope to improve the balance sheet, cut debt, and push CNP to consider a potential sale in the future. CNP hopes to improve their credit profile too which would eliminate the need for a capital raise in 2021.  The company launched a strategic review and late in the year announced they would sell their Oklahoma Gas and Arkansas gas utilities in Q2. Analysts have an average target for shares of $24 with a Street High $28. Mizuho positive on 5/13 as the company’s exit of its midstream ownership will serve as the next catalyst in it achieving a premium valuation. Short interest is 3%. Hedge fund ownership rose 4.5%.

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