This article is aimed at presenting stocks that are trading below their most recent quarter’s book values and which have experienced heavy insider buying in recent times. Since financial stocks’ book values are marked to market, they typically trade in line with their book values. Therefore, the stocks trading below their book values are undervalued and present you with an investment opportunity. The three stocks short-listed have also experienced insider buying, confirming their attraction as potential investment opportunities. Among the short-listed stocks are Symetra Financial Corporation (NYSE:SA), Bank of America Corp (NYSE:BAC) and RAIT Financial Trust (NYSE:RAS).
Bank of America Corp (NYSE:BAC)
Bank of America Corp (NYSE:BAC) has a market cap of over $131 billion and is yielding 0.33% on its quarterly dividend payout of $0.01 per share. In the US, the Fed ensures that banks don’t pay elevated dividends and reduce their capital to dangerous levels. The bank reported a book value of $20.24 per share at the end of the fourth quarter. The shares of Bank of America Corp (NYSE:BAC) are exchanging hands at $12.18. Therefore, the stock is trading at a significant discount of 40% to its book value.
Bank of America Corp (NYSE:BAC) operates as a second largest money center bank by assets, after JPMorgan Chase & Co. (NYSE:JPM). Bank of America Corp (NYSE:BAC) reported heavy insider buying since the beginning of the current year. Overall, around 2.4 million shares of the bank were bought by some of its top executives. Among most recent purchases are the purchasing made by the bank’s CEO and COO. One of the CEO’s purchases was made at an average price of $12.57.
RAIT Financial Trust (NYSE:RAS)
RAIT Financial Trust (NYSE:RAS) has a market cap of around $470 million. Yielding in excess of 6%, the company has a quarterly dividend payout of $0.12 per share. The company’s first quarter dividend payment is 20% above the payment of the prior quarter and 50% above the prior year’s distributions. The company is currently trading at 44% discount to its book value of $14.16 per share.
RAIT Financial operates as a mortgage REIT in the US and reported insider buying worth 380k shares since the beginning of 2013. During the month of March alone, 85k shares of the company were bought by its top executives. Besides, one its officers offloaded 64k shares during the month of March at an average price of $8.12 per share.
Symetra Financial Corporation (NYSE:SA)
Symetra Financial Corporation (NYSE:SA) has a market cap of around $1.6 billion and yields little under 2.5% on its quarterly dividend distribution of $0.08 per share. This dividend payment increased from the prior quarter’s payment of $0.07 per share and it is worth noting that the company has been able to increase its dividends since May 2010. The company is currently trading at 56% discount to its book value of $26.29 per share.
Symetra Financial operates as a life insurance company, providing medical stop-loss insurance, fixed and variable deferred annuities, single premium immediate annuities and universal life insurance. Around 213k shares of the company were bought by its insiders since the beginning of the current year. Most recently, the company’s CIO, CEO, and CFO bought 211k shares of the company in March 2013.
Conclusion
The aforementioned stocks are trading well below their book values seemingly making them attractive investments. Further, insider bullishness gives a signal that these stocks might be expected to appreciate in price.
The article Heavy Insider Buying at These Undervalued Financial Stocks originally appeared on Fool.com and is written by Adnan Khan.
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