Crude-oil storage tanks at a Plains All American Pipeline facility.
Angus Mordant/Bloomberg
Insiders have snapped up stock of two companies whose prospects have brightened due to Russia’s invasion of Ukraine.
Filings with the Securities and Exchange Commission show large purchases by people or entities linked to Plains All American Pipeline LP (ticker: PAA) and ReneSola (SOL). Plains is levered to crude oil, whie ReneSola stands to gain as higher energy prices give a push to solar-power projects.
Shares of Plains All American, a master limited partnership that owns and operates pipelines and energy infrastructure, have gone on a wild ride this year in response to the war and other factors, including surges in oil prices, a major fire at a Texas fuel-export facility, and inflation fears. Shares sport an 8% gain so far in 2022, but they tumbled 14% in June alone.
“The volatility is unbelievable,” said Plains All American CEO Willie Chiang on June 23 at the J.P. Morgan Energy, Power & Renewables Conference. “I don’t think we’ve seen the worst of the situation yet because the sanctions on Russia haven’t fully kicked in. I think people have grossly underestimated the supply-chain lines to be able to get Russian crude to end-markets. The importance of that is…the Permian Basin is really going to be very critical in meeting crude oil demand in the world.” Later, Chiang added, “We’re big in the Permian.”
Plains All American is indeed big in the Permian Basin, the oil-rich region in West Texas and southeastern New Mexico. In the first quarter, the company moved an average 5.2 million barrels of oil a day from the Permian, accounting for about 73% of its total crude-oil-pipeline volume.
The same day that Chiang spoke at the conference, Plains All American director Kevin McCarthy paid $2 million for 200,000 shares, an average price of $9.81 each, according to a form he filed with the SEC. A vice chairman at investment-management firm Kayne Anderson Capital Advisors, McCarthy didn’t respond to a request for comment on his stock purchase.
Solar-project developer ReneSola (SOL) shares have slid 22% year to date, although they have spiked from time to time. Raymond James analyst Pavel Molchanov had been upbeat on the shares in January, but his bullish thesis hasn’t played out yet.
A letter to shareholders the company issued June 7 noted that European Power Purchase Agreement (PPA) prices for solar rose by 27.5% from a year earlier during the first quarter. “This significant increase in PPA prices is largely driven by demand directly attributable to the conflict between Ukraine and Russia driving up energy prices across Europe,” ReneSola wrote. “In addition, we are also seeing an increase of retail electricity providers purchasing spare capacity to meet their own decarbonization and sustainability goals and provide green electricity offerings to their customers.
The higher power prices have boosted the company’s pipeline of projects in Europe, it said.
Shah Capital, a contrarian investment firm, paid $5.2 million from June 13 through June 29 for a total of 1.1 million shares, an average price of $4.50 each. ReneSola Chief Financial Officer Ke Chen, who serves on the solar firm’s board, is also a Shah Capital director.
Shah Capital now owns 12.7 million ReneSola shares and is the third-largest shareholder, according to S&P Capital. It didn’t respond to a request for comment.
“If you believe the hydrocarbons are going to be around for a long time—and we do—crude oil, specifically, is going to be around for decades,” said Plains All American’s Chiang at the conference. “Every outlook and assessment on crude-oil demand going forward—even in the most-severe scenarios—has crude oil being a piece of it.” He added, “We haven’t updated our guidance, but we will later this year.”
On June 8, Raymond James’ Molchanov wrote, “ReneSola stands out for its substantial European footprint—comprising 70% of the project pipeline as of 1Q22—making it one of the most direct ways for investors to get exposure to Europe’s energy transition, bolstered by climate policy and the urgency of energy security.”
He also argued that Russia’s gas cutoffs will backfire. “This attempt at geopolitical blackmail will not work—if anything, it is having the opposite effect—with solar being one of the means whereby these and other European countries will be phasing out Russian gas.” he said.
Molchanov reiterated a Strong Buy rating on ReneSola shares with a $12.50 target price.
Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.
Write to Ed Lin at [email protected] and follow @BarronsEdLin.
