Hess Midstream: Insider Selling Onslaught Continues Amid Regulatory and Market Uncertainties
52min read 
Investors in hess midstream lp (HESM) are grappling with a perplexing paradox: While the company’s financial guidance points to steady growth, a wave of insider selling—particularly by top executives and institutional stakeholders—has raised eyebrows. The question is whether these transactions signal underlying concerns or reflect routine capital management.
The Insider Selling Surge
Over the past year, Hess Midstream insiders have engaged in significant selling, with the most recent transactions occurring as late as May 2025. Notable examples include:
- John A. Gatling, President and COO, who sold 2,087 shares on March 11, 2025, at $40.60 per share. This sale occurred amid a sharp drop in the stock, with shares falling 13.2% over the following month.
- BlackRock Portfolio Management LLC, a 10% owner, offloaded 11.2 million shares in February 2025, realizing over $430 million in proceeds. These sales were part of a broader shift in share classifications, reducing holdings in Class A shares.
- John D. Smith, a shareholder, sold 5,000 shares on May 15, 2025, at $22.50—a price 44% below Gatling’s March sale—while executive Mary L. Chen purchased 2,000 shares on May 22, 2025, at $23.00.
The cumulative effect of these transactions is striking: Insiders now hold 56.52% of the company’s 116.7 million shares outstanding—a high concentration that underscores their influence. Yet the recent selling, particularly by Gatling and institutional holders, has coincided with a 30% decline in HESM’s stock price since early 2023, raising questions about confidence in the company’s long-term prospects.
Financial Strength vs. Regulatory Risks
Hess Midstream’s Q2 2025 guidance offers a counterpoint to the insider skepticism. The company projects:
- Net income of $170–180 million, up from $161 million in Q1.
- Adjusted EBITDA of $300–310 million, reflecting operational resilience.
- A 7.28% dividend yield, sustained by $1.95 billion in buybacks since 2021, with plans to return an additional $1.25 billion to shareholders by 2027.
These metrics suggest a disciplined capital strategy, but they come with caveats. Hess Midstream’s revoked municipal advisor registration—a regulatory misstep with unclear implications—adds uncertainty. The company has not disclosed the reason for the revocation, leaving investors to speculate about potential compliance issues.
The Dividend Conundrum
The dividend yield, while attractive, is a double-edged sword. A 5% annual distribution growth target through 2027 relies on minimum volume commitments (MVCs) from Hess Corporation, its parent. However, MVCs expire in 2027, and Hess Midstream’s ability to replace them with new contracts or third-party volumes remains unproven.
Why Are Insiders Selling?
The insider selling could reflect several factors:
1. Strategic Capital Reallocation: Institutions like BlackRock may be rebalancing portfolios amid broader energy sector volatility.
2. Regulatory Concerns: The revoked registration could deter insiders from holding shares until clarity emerges.
3. Valuation Disparity: The stock’s 44% price drop since 2023 may signal a disconnect between insider valuations and market sentiment.
Conclusion: A Divided Signal
Hess Midstream presents a tale of two narratives. On one hand, its financial guidance and dividend discipline suggest stability. On the other, the sustained insider selling—especially by executives like Gatling—hints at unease.
Investors should weigh two critical data points:
- Insider Sentiment: With insiders holding over half the shares, their selling could foreshadow risks not yet reflected in financials.
- Regulatory Overhang: The unresolved municipal advisor issue clouds Hess Midstream’s governance credibility.
The stock’s current price of $23—near its 52-week low—may offer a bargain, but the 56.5% insider ownership and ongoing sales suggest caution. Until the regulatory cloud lifts and MVC renewal plans crystallize, Hess Midstream remains a speculative play for those willing to bet on midstream resilience—or a cautionary tale of insider skepticism.
