Ok, I’m excited about this one. We've got an insider buy that’s too intriguing to ignore. Given the circumstances surrounding this stock, it might be worth piggybacking… or at least taking a closer look (as always, do your own due diligence).

Wesley Edens, CEO of New Fortress Energy (and co-owner of the Milwaukee Bucks), filed a Form 4 that he dropped $1.7 million on his own company’s stock. Now remember, when the top dog is buying, it usually means one of two things… he sees a turnaround brewing, or he’s doubling down to keep the illusion of confidence alive.

And confidence is something NFE could use right now. The stock is down 71% in the last year, buried under a pile of debt that would make credit card companies blush. They lost over $224 million in a single quarter, and analyst downgrades are piling up like junk mail in my mailbox.

(Source: Milwaukee Journal Sentinel)

To be blunt, New Fortress Energy is blowing through money like a drug addict. Revenue may have beaten expectations at $679 million (versus a projected $613 million), but that hasn’t stopped the company from burning cash at an alarming rate. Their debt-to-equity ratio is a shocking 4.06, meaning they’re essentially financing operations with a mountain of borrowed money (not sure if you know much about business, but eventually you have to start making more money then you spend).

To keep the lights on, NFE recently secured a $1.27 billion credit agreement, which, on the surface, sounds like a lifeline. But it’s actually like taking out a payday loan to cover last month’s rent. Sure, it buys time, but the long-term sustainability is still a big question mark. They’ve also promised to sell off $2 billion in assets by mid-2025, which could either help cut down debt or be a sign that they’re willing to sell anything that isn’t nailed down.

To go a step further… if Edens’ insider buy was supposed to inspire confidence, options traders didn’t get the memo. Put options are up 70%, meaning a whole lot of people are betting that this stock still has room to fall. At the same time, institutional investors still own 58.61% of the stock, so while some hedge funds are bailing, others are holding on and believe in the comeback.

And then there’s the analysts, which can’t seem to decide if NFE is worth saving or writing off as a loss. Deutsche Bank upgraded the stock from “sell” to “hold”, Stifel Nicolaus still has a “buy” rating but lowered their price target from $23 to $19, and Morgan Stanley knocked theirs down from $15 to $14 while maintaining an “equal weight” rating.

Even with all doomsdayers, NFE has been making moves in the LNG sector. The company recently struck a deal with Pemex, Mexico’s state-owned oil giant, to expand its natural gas operations. This partnership could help stabilize revenue in the long term, assuming the execution goes as planned (which, given NFE’s track record, is far from guaranteed).

On top of that, NFE announced a long-term contract to supply LNG to an undisclosed European energy company… a deal that could bring in significant revenue once deliveries ramp up in 2025. The problem is that the market is forward-looking, and right now, investors are focused on the short-term financial black hole rather than the long-term potential.

(Source: ECOnnect Energy)

Historically, big insider buys are a sign of confidence, but they don’t always translate into stock rebounds. Just look at what happened in 2023 when multiple NFE executives (including Chief Financial Officer Christopher Guinta and Director Katherine Wanner) bought shares at $30-$35. Today? The stock is barely holding above $10. Not exactly a case study in great timing.

If NFE can successfully execute its asset sales, manage debt, and get its LNG partnerships rolling, this could be a high-risk, high-reward turnaround play. But if they screw up any part of the plan? The selloff could just be getting started.

If you like following insider buys, this one’s intriguing, especially when a stock is already down 71%... but as we’ve seen the past several months, you never know when the dip will keep dipping.

Stock.News does not have positions in companies mentioned.