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Institutions and Insiders Are Gobbling Up Shares of HASI

HASI stock price

Don't be alarmed if you’ve never heard of Hannon Armstrong Sustainable Infrastructure Capital Inc.(NYSE: HASI)  The company is a very small business investing in sustainable infrastructure projects and operates as a REIT. It pays 90% or more of its taxable earnings as dividends, which makes it a high-yield issue with a 6.5% yield. The fact that insiders and institutions have begun to gobble it up makes it an investment readers need to know about. 

Insider activity is notable for several reasons. The 1st is that insiders have only bought the stock for 5 consecutive quarters. This is a sharp contrast to the previous year when insiders had been selling in large quantities. Another notable detail is that buying is broad and spread across the C-suite, the board, and major shareholders.

The tally includes several purchases by the CFO and CEO, purchased by 5 executive vice presidents, the CAO, 2 directors, and a major shareholder. They have increased insider holdings to 2.3%, and the institutions echo this activity. 

Institutions have been buying HASI for 3 consecutive quarters, and there are also some interesting details in this data. Institutional activity is broad, ramping higher, and institutions own about 86% of the stock.

The most noteworthy factor is that institutional activity is broader than index funds, which will also need to start buying the funds. The company announced this week that it would be added to the S&P Smallcap 600, which is a move that will drive increased ownership of this high-yield REIT. 

Why Are Sell-Siders Buying HASI? 

The sell-side is buying HASI for several reasons, including the dividend. Aside from the 6.5% yield, the stock is trading at 3-year lows and well below trend. This is largely due to short-sellers, which have their interest above 10%, but this has opened up a significant opportunity for green investors.

Hannon Armstrong Sustainable Infrastructure Capital invests in the infrastructure of decarbonization and sustainability and provides diversification as a real asset. Real assets are attractive because they offer diversification and a hedge against inflation. After all, contracts are often (usually) pegged to inflation and come with stable revenue streams. 

Among the recent developments announced by HASI is an increase in its revolving credit facility and the issuance of green debt. The funds will fund new growth opportunities, including an expanded partnership with Summit Ridge Energy. Summit Ridge Energy, the nation’s leading commercial solar and energy storage company, is accelerating its expansion plans; the new deal is worth double the previous and will drive revenue and earnings for HASI long into the future. 

How Does HASI Dividend Stack Up? 

Hannon Armstong Sustainable Infrastructure Capital Inc. pays investors a solid dividend worth 6.5%, with shares trading near $24.25. The payment is reliably safe and has an outlook for double-digit distributable earnings growth over the next few years. The company reiterated its long-term guidance for 10-13% growth in August and should be able to sustain distribution increases.

As it is, the company has increased the payment for 4 consecutive years at a low single-digit pace. Based on the outlook, it seems HASI will have to increase that pace this year and next, which is good news for high-yield investors. 

The analysts are undecided about what HASI is worth, but there are a surprising number of them, 7, following the stock, and they rate it a Moderate Buy. The Moderate Buy rating has been firm over the last 12 months, but the price target is falling. The consensus implies about 40% of the upside, but the most recent are well below that level. 

The low price target was set in August; it’s $24 and suggests the market is fairly priced at the current level. This stock may not move appreciably higher soon, but the bottom is in. The recent lows were met with a spike in volume due to an increase in insider and institutional buying that could continue through the end of the year. 

HASI stock chart

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