Tourmaline Oil Corp (Alberta) T.TOU

Ink Research

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June 24, 2022

Morning Report: Resource insiders pounce on Powell's black magic selloff

Jerome Powell played the magician during his congressional testimony Wednesday and Thursday as he mesmerized stock and bond investors with the idea the Fed would successfully control inflation by quickly engineering an economic pullback without having to raise interest rates very much. His black magic had investors rotating into bonds and out of commodities which sent resource stocks into a tailspin. The Canadian Energy sector entered a bear market with the S&P/TSX Capped Energy Index falling 6.92% on the day to end 25.4% below its high watermark set way back on June 8th.

As equity investors dumped resource stocks, some Canadian insiders remained free of the Federal Reserve Chairman's dark spell and bought company shares as they tumbled. We saw multiple insider buying reported for yesterday at oil-tilted Baytex (BTE) which remains up about 102% since we last featured it here on September 17, 2021. The stock recently peaked at $91.6 on June 9th at which point it had a trailing P/E of 2.9. According to Refinitiv the P/E now stands at 2.1. Natural-gas focused Tourmaline Oil (TOU) was trading at a higher trailing P/E of 12.5 when it peaked at $80.66 on May 31st. It now trades with a P/E of 10.8 and that was enough of a dip to encourage CEO Mike Rose to buy the pullback Thursday. The stock remains up about 60% since we last wrote about it December 20, 2021.

Meanwhile, the forest products group is having a tough year with investors fretting about the outlook for US housing. Interfor (IFP) put in a 2022 peak of $44.56 on January 13th when it was sporting a trailing P/E of 3.0. The stock is down about 22% since we last featured it here on May 19th. Insiders liked it then, and they like now with its trailing P/E chopped down to 1.7.