It seems like tough time for banking sector is finally over as insiders have again started dipping into them. When insiders start buying a stock, the chances of the stock outperforming in the near future increase significantly. Two such bank stocks that have seen good amount of buying coming in for insiders are – KeyCorp (NYSE:KEY) and Century Bancorp, Inc. (NASDAQ:CNBKA). Let’s uncover the trades in detail.
KeyCorp (NYSE:KEY) is a $10.73 billion market cap, parent holding company for KeyBank National Association (KeyBank). On October 15, the company reported its third-quarter results following which its stock tumbled by more than 10%. On October 17, Beth E Mooney, Chairman and Ceo of KeyCorp (NYSE:KEY), purchased 20,000 shares of the company at an average price of $12.32 per share, and Ann Ruth M Gillis, a director of the company, purchased 1,000 shares at an average price of $12.2. Following this purchase, Mooney now owns a total of over 423,000 shares and Gillis a total of 5,500 shares. For the third quarter of 2014, the company’s revenue fell by 4.3% year over year to $988 million and EPS fell by 23% year over year to $0.23. The company currently trades at 12.4 times trailing earnings, while the industry average P/E is 13.62. One related Warren Buffett quote for this situation is “The best thing that happens to us is when a great company gets into temporary trouble…We want to buy them when they’re on the operating table“. Insiders usually do the same which is one of the reasons their purchases outperform the market on average.
Ken Griffin’s Citadel Investment Group and Cliff Asness’ AQR Capital Management are two of the largest shareholders of the company, as of June 30, 2014, they own over 10.7 million shares and over 9.8 million shares of the company, respectively. Most analysts on the Street have a ‘Hold’ rating on the stock with an average price target of $14.5. On October 17, analysts from FBR Capital reduced their target price for the stock to $14 from $15 while maintaining the ‘Market perform’ rating.
Century Bancorp, Inc. (NASDAQ:CNBKA) is a $130 million market cap state-chartered bank holding company that operates through its subsidiary Century Bank and Trust Company. On October 16 and 17, James J Filler, a large shareholder of Century Bancorp, Inc. (NASDAQ:CNBKA), purchased 1284 shares of the company in several tranches at an average price of $35.548. Filler now owns over 387,000 shares of the company. For the third quarter of 2014, the company reported net income of $5.7 million or $1.03 per share, compared to net income of$5.519 million or $0.99 per share in the same period, last year. The stock is relatively cheaper to its peers as it trades at 9.45 times trailing earnings, compared to industry average of 13.8. Paul Magidson, Jonathan Cohen and Ostrom Enders’ Castine Capital Management is a hedge fund that as of June 30, 2014, owns over 84,000 shares of the company.
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