When the market closes today, the cash portion of my portfolio will surge past 40% as myriad covered call positions expired in the money. That means I will have to do a lot of research in the weeks and months ahead to find new opportunities for all this "ammo." One good place I always start in this search is to look at what insiders are purchasing. Today, we look at a couple of names on that list.
Let's start with Zymeworks (ZYME) . This oncology focused developmental concern has several compounds within its pipeline. The most important candidate of these is a bispecific antibody candidate called Zanidatamab. Zymeworks is pursuing using Zanidatamab to target a variety of HER2-expressing cancers in combination with other drugs and also as a monotherapy.
I just opened an initial stake in this small-cap name this week via covered call positions despite what is a healthy short percentage in the shares. A beneficial owner of the stock has added more than $17 million worth of equity to their stake in the firm so far in 2023, which is nice vote of confidence for the company's prospects.
In addition, the company posted encouraging interim results from a study called HERIZON-BTC-01 in December. This trial is evaluating Zanidatamab as a monotherapy to treat second line HER2-Amplified BTC (Biliary Tract Cancer). Zymeworks has a collaboration deal with Jazz Pharmaceuticals (JAZZ) .
If Jazz chooses to continue this partnership after final results from this trial come out in the second half of this year, which seems likely, it will trigger a $325 million payout to Zymeworks. The company will also be able to earn significant milestone/regulatory payouts as well as royalties. Zymeworks has a large cash position and a market cap of only approximately $600 million.
Then there's EOG Resources (EOG) which is on my research list for this weekend. This Houston-based large-cap oil and natural gas producer looks solid on a cursory basis. Revenue should be up just over 40% for FY2022 when the company reports fourth quarter results early next month. The company gets approximately half of its revenue from crude oil and the rest from natural gas and natural gas liquids. Sales growth should slow significantly in FY2023 on lower energy prices.
However, the stock is priced at nine times earnings and sports a 2.5% dividend yield. The shares are off just over 10% from recent highs in late November. This has triggered a company director to purchase just over $2.6 million worth of stock a week ago.
Notably, this is the first insider purchase in the shares since November 2021 which was just before a big rally in this equity. Options are very liquid against this name, and I am likely to tee this one up for a new covered call holding to begin next week after I dig a bit deeper into this investment thesis over the weekend.