Scorpio president places more of his own money on the line in the belief Scorpio Bulkers shares will rise
Scorpio Bulkers president Robert Bugbee turned heads when he bought $1m of his company’s stock at the end of last week and he also may have turned back the clock.

Bugbee is employing a familiar strategy, as it was nearly eight years ago that he purchased just under $4m-worth of shares in the former OMI Corp, a Stamford-based tanker owner of which he also was president.

It was one of the largest shares buys by a public-company executive on record at that time, and it also proved to be a shrewd investment. Bugbee bought OMI at $17.76 per share. OMI was sold a year later at $29.75 per share, giving Bugbee a one-year profit of $2.7m on that block of stock alone.

Both Bugbee and his then boss, OMI chief executive Craig H Stevenson Jr, had built sizeable personal holdings of OMI shares. TradeWinds estimated Stevenson walked away from OMI with $36m and Bugbee with $24m.

But Scorpio — which goes under the ticker code SALT on the New York Stock Exchange — and OMI may have more differences than similarities. While OMI was a seasoned owner riding the crest of a tanker-market boom, Scorpio is a fledgling public company counting on a dry-bulk recovery that has not yet taken hold.

Still, investors seemed to take notice of Bugbee’s buy. Scorpio shares closed at $8.51 just before the transaction was disclosed but rose to $8.98 on the next trading day and were around $8.85 at TradeWinds’ deadline.

Bugbee’s shares buys at OMI came while management was pursuing an aggressive shares-buyback programme: essentially arguing that they were taking back the company from investors who had failed to value the stock appropriately.

Bugbee has been making some of the same noises lately about his two public companies, the other being Scorpio Tankers. That firm recently authorised a $100m shares-repurchase programme (see story below). Scorpio Bulkers does not have one in place yet but Bugbee said on a recent earnings call that it could sell some of its 79 bulker newbuildings on order to buy back stock if trading levels do not improve.

In any case, Bugbee is putting his money where his mouth is — again.

Bugbee made exactly that point in an interview with TradeWinds this week.

“There can be many reasons why insiders sell stock but only one reason why an insider would buy — it’s because they think the stock is going up,” he said.

“There are no different reasons for why I’m buying SALT than what we described on the conference call. It’s just backing up the conviction we have in the fundamentals of SALT, as we expressed then.

“The signs are there, both for the dry cargo market and for the company. We’ve got maximum pessimism and scepticism from investors as to a recovery. But there continues to be great optimism in the charter market by the physical players and in the fundamental news.

“SALT is undervalued by all matrixes. You don’t know exactly when dry cargo is going to come out of its seasonal lull but when it does, it’s likely to come back even stronger and SALT should trade higher.”

Bugbee agrees that Scorpio is earlier on the recovery wheel than was OMI at the time of his big buy. But he notes that he started buying OMI stock years earlier when it was at a like stage, and those acquisitions paid off too.

_{source: tradewindsnews.com}