What are we looking for?
U.S.-listed bank stocks that demonstrate bullish insider sentiment.
The screen
Executives and directors of publicly traded companies have the most up-to-date information on the operations and financial performance of the organization, including material non-public information not available to investors. For this reason, following insider buying of a stock can signal bullish sentiment to investors, as insiders only purchase shares if they believe the share price will rise. Today, we screen for U.S.-listed bank stocks that have strong indicators of insider buying, suggesting that the share price could continue to rise.
- First, we screen for U.S.-listed banks with a market capitalization greater than US$1-billion.
- Next, we screen for companies where insiders have shown bullish sentiment toward the stock. We use the StarMine Insider Filings Model to screen for companies with a score greater than 90. The Insider Filings Model is a percentile rank of a security versus all other U.S.-traded stocks based on three factors: the level of agreement among insiders regarding buying or selling of stock; the value of stock being purchased; and the value of stock being sold. A score of 90 would represent the top 10 per cent of stocks where insiders are net buyers of their own stock.
More about Refinitiv
Refinitiv, a London Stock Exchange Group business, is one of the world’s largest providers of financial market data and infrastructure, serving more than 40,000 institutions worldwide. Refinitiv provides information, insights and technology that drive innovation and performance in global financial markets, enabling the financial community to trade smarter and faster, overcome regulatory challenges and scale intelligently.
What we found
The screen ranked by the StarMine Insider Filings Model produced seven companies, all of which are regional U.S. banks. The lack of banking giants among the top scorers could be influenced by the fewer insiders at smaller banks having a proportionally greater impact on price and liquidity.
Texas Capital Bancshares Inc., which tied with FB Financial Corp. for the highest rank in the StarMine Insider Filings Model at 99, is a commercial bank headquartered in Dallas with retail branches across the state. Texas Capital, which had a one-year total return of 168.1 per cent, saw three insiders buy stock over the past 12 months totalling US$1.5-million. No insiders sold stock during this period. The bank hired Rob Holmes as chief executive officer, an experienced banker who joined Texas Capital after spending more than 30 years with JPMorgan Chase & Co. and its predecessor firms, most recently as global head of corporate banking. Texas Capital is facing some headwinds in its mortgage business, however, with the recent appointment of its new CEO, analysts are anticipating the company will announce a change in strategy that could propel the stock higher.
First Busey Corp., which scored 98 in the Insider Filings Model, had the lowest one-year total return of the screened companies at 49.4 per cent. First Busey, which is headquartered in Champaign, Ill., and has operations in Illinois, Missouri and Florida, has seen encouraging loan growth from its commercial banking business, which increased by US$58-million in the most recent quarter. The bank, which traditionally has a more conservative risk approach than its peer group, expects credit provisions for loan losses to remain low over the next 12 months, providing investors with added comfort that the company will not experience any unforeseen losses. Like Texas Capital, insiders at First Busey were also net buyers of the stock, with 10 insiders purchasing a total of US$1.5-million of stock over the past 12 months.
Investors are advised to do their own research before trading in any of the securities shown.
Stephen Donovan, MBA, is a customer success leader, Refinitiv buy-side and commodities trading for the Americas.
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