U.S. Markets closed

Penn West Petroleum Insider Sells Shares

- By Kyle Ferguson

Penn West Petroleum (PWE) insider Ho Cheuk Fund sold 15,086,120 shares of the company between Sept. 20 and Oct. 14, according to a Form 4 filing with the Securities and Exchange Commission.

Penn West Petroleum is headquartered in Calgary, Alberta, and is a senior exploration and production company. The company explores, develops and holds interests in oil and natural gas properties and related production infrastructure in the Western Canada Sedimentary Basin, a region that is one of the world's largest petroleum reserves. Penn West Petroleums' goal is to be the company that redefines oil and gas excellence in Western Canada.

Penn West Petroleum has a market cap of $883.81 million, an enterprise value of $1.31 billion, a price-book (P/B) ratio of 0.42, a price-sales (P/S) ratio of 1.16 and a quick ratio of 1.38.

According to GuruFocus, Penn West Petroleum has a financial strength rating of 4/10 with a cash to debt ratio of 0.65 and an equity to asset ratio of 0.55. Its Piotroski F-Score of 5 indicates that the company's financial situation is typical for a stable company. Penn West Petroleum also has a 4 of 10 profitability and growth rating with an operating margin of -234.43%, a net-margin of -25.92%, a ROE of -70.99%, a ROA of -38.02 and a ROC (Joel Greenblatt (Trades, Portfolio)) of -54.65%.

After selling 15,086,120 shares of Penn West Petroleum, the Ho Cheuk Fund now owns 34,290,677 shares of the company.

It's likely that the the insider sold 15,086,120 shares of Penn West Petroleum because the company's market price has nearly tripled since June 1, going from 66 cents to $1.77 on Sept. 20, when the Ho Cheuk Fund began reducing its position in Penn West Petroleum. It is possible that they reduced their stake in order to cash in on the recent substantial gain of Penn West Petrolum's market price. The company may have also decided to sell because the company is trading above its instrinsic value, according to the Peter Lynch chart below.

Disclosure: Author does not own any shares of this company.

Start a free 7-day trial of Premium Membership to GuruFocus.

This article first appeared on GuruFocus.