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The Bank Insiders Are Buying Again: Should You?

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Were you surprised by the strength of the financial stocks in 2016?

Maybe you shouldn’t have been.

One of the biggest CEO insider buys in 2016 was by Jamie Dimon of JPMorgan Chase who bought 500,000 shares for $26 million in February.

On the day he bought, JPMorgan's shares had hit a new 2016 low and were down 16.5% year-to-date thanks to the early year stock market sell off.

At the time, Dimon already had 7 million shares of JPMorgan stock in his 401k and his wife also owned a million shares in her own account.

It was just Dimon's third purchase of shares on the open market in the prior 12 years. He bought 500,000 shares in January 2009 during the Great Recession doom when bank shares were plunging to multi-year lows and another 500,000 in July 2012.

What did Jamie Dimon know that February?

The shares have since soared over 90%.


In 2016, the Bankers Dove In

But he wasn't the only banker buying in 2016.

At Huntington Bancshares, three corporate insiders, including the CEO and CFO, bought on February 1. Since then, the shares have risen over 65%.

At Zions Bancorporation, between January 28 and February 9, the CEO, the CFO, a director and two Executive Vice Presidents all bought shares. The shares are up more than 125%.

At KeyCorp, there was a huge cluster buy of insider buying between January 25 and February 8 that resulted in 9 directors and the CEO all buying shares. The stock has gained over 65% since those buys.


They’re at it Again in 2018

2016, it turns out, wasn’t a fluke.

With the bank stocks down on their luck again in 2018, the insiders are diving in for even more shares.

At JPMorgan, for example, the directors have been buying, with one buying 13,000 shares on May 14, 2018 and a second director buying 1,150 shares on October 19, 2018.

Insiders are also buying again at the big regional banks even though the shares are much higher than 2016.

Two insiders at KeyCorp recently bought more shares including the CEO and CFO. The CEO bought 10,000 shares in November 2018. She was one of the 9 insiders who bought in the big cluster buy as the shares hit a bottom in January and February 2016.

This is the first time the CEO has bought shares again since those 2016 lows.

Cluster buys send a powerful signal.

What do they know that they are buying even though the shares are no longer at those 2016 lows? They are still seeing value in the shares.

More . . .


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Zacks' Best Insider Bank Stock to Buy Monday

Right now, one bank with insider moves stands out above all the others. The CEO just bought the stock despite already owning over a million shares.

When in-the-know officers dip into their own pockets to buy shares of their own company, there’s only one reason: They expect the stock price to go up.

This bank is a rock-solid company in a top industry with shares that are clearly undervalued. Zacks metrics indicate that the CEO is taking advantage of an exceptional turnaround buying opportunity. And so should you.

Our recommended insider trades are normally closed to public view – but you can gain access until midnight Sunday, November 18.

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Insider Buying Sends a Strong Signal

Why would these CEOs and corporate insiders spend so much of their money on their own companies’ stock when they already own a ton of shares already?

Greed!

Pure and simple.

The opportunity to make more money motivates people- even people who are already millionaires like Jamie Dimon.

If top insiders are buying, it’s because they know something very good is going on at the company. Maybe it is a new product. Or contract. Or pending merger.

Whatever the reason, they are very confident that shares will be on the rise. After all, who would buy more stock in a company if they knew it was sinking???


Buy When the Insiders Buy

When high level insiders buy, they are required to report the purchases to the SEC within 48 hours of the trade. The trade then becomes public information.

Hedge funds and other professional investors routinely use this information to get an edge on their trades.

For most of us, though, it’s not easy to get access to the insider information. While the media will trumpet huge insider buys like Dimon’s $26 million buy, did you hear anything about KeyCorp’s CEO’s 10,000 share buy for $182,600 on Nov 1, 2018?

The challenge is getting easy and reliable access to all the insider trades and then figuring out which ones to buy.


Where to Find the Insider Buys

Anyone can go on the SEC website and get the insider trading information but it’s time consuming to search by individual companies.

Some investment firms collect the insider buying data and can provide it to you as a weekly list. Have you ever seen one of those lists? The sheer number of companies can be overwhelming.

In some instances, the insiders have been known to buy en masse. Then what’s an investor to do?

This happened during the stock market dip in August 2011. As stock prices fell, insiders felt that their companies were undervalued and rushed out to buy shares.

That August, insiders bought stock in 50 different S&P 500 companies in just one week. Even if you got a list of those stocks, how would you narrow it down to the stocks that were truly worth buying?

To solve this problem, our Zacks research team developed a strategy that monitors selected insider buying activity at companies that already show strong earnings and excellent valuations. We do the work of sifting through all the insider buys so you don’t have to.

Today only 6 stocks meet the demanding criteria of our Insider Trader portfolio.

The portfolio is normally closed to public access and closes again this Sunday. But today I'm inviting you to look into it and see our live recommendations with strong fundamentals and substantial upside including:

• Zacks' best "insider" bank stock. The CEO snapped up more shares in this rock-solid company despite already owning more than a million of them. Just in time for its predicted turnaround.

• Monster "Cluster Buy" where the CEO, COO, SVP, Director, and General Counsel dipped into their own wallets for a total of $1,057,315. The stock pays a substantial 5.5% dividend, is underpriced, and coiled for rebound.

• And more.

Bonus Special Report: Just for exploring our insider picks, you may download Zacks' Special Report, 7 Stocks Set to Double free of charge. These 7 buy-and-holds offer an enticing balance to our more active Insider Trader moves. Each is the #1 favorite of a Zacks expert for its potential to jump +100% or more over the next year.

Important: Your chance to access the Insider Trader portfolio and Special Report is temporary. The number of investors who see these recommendations must be limited. The portfolio closes again to entry Midnight Sunday, November 18.

See our insider trades and download 7 Stocks Set to Double now >>

Best,

Tracey

Tracey Ryniec, Zacks' insider and value strategist, is Editor in Charge of the Zacks Insider Trader.

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