Tracking insider purchases is very important to our investment strategy, just like keeping an eye on hedge fund activity. Therefore, in this article, I will look into two companies in the banking industry that have seen insiders buy their stock over the past couple of days.
First off is Huntington Bancshares Incorporated (NASDAQ:HBAN), a $7.7 billion market cap a multi-state financial holding company, which provides various financial services through its subsidiary, The Huntington National Bank. On Thursday, April 24, a Board Director, David Porteous, acquired 2,760 shares of Common Stock for $9.40 apiece. Following this transaction, the insider owns more than 700,000 shares of the company (through diverse direct and indirect holdings), valued at above $6.5 million.
In addition to Mr. Porteous, about 20 major hedge funds hold long positions in the stock. Ben Levine, Andrew Manuel and Stefan Renold’s Lmr Partners is the hedge fund with the largest stake, holding shares in excess of 2.5 million. Having increased its position by 168% over the quarter, this position accounts for roughly 2.5% of the fund’s equity portfolio value. Trailing Lmr, and also quite bullish, is David Harding’s Winton Capital Management, which last reported an 188% increase, to 2.469 million shares. Other prominent investors that have been upping their bets on Huntington Bancshares are Jim Simons and Israel Englander.
All of this bullishness is quite comprehensible if one takes a look at the firm’s above average margins and returns, coupled with a relatively cheap valuation (13 x P/E), and a 2.12% dividend yield. However, growth prospects are limited, and this is why analysts do not like this stock as much as insiders and funds do.
The second case I would like to refer to is that of Associated Banc Corp (NASDAQ:ASBC), a $2.8 billion market cap bank holding company in the U.S. Although the company trades slightly above industry average valuations, at 16x P/E, boasts below-average margins and returns, and holds significant debt in relation to its total equity, one insider seems to feel confident about its future. Last Wednesday, April 23, John B. Williams, Board Director, acquired 1,000 shares of Common Stock for $17.91 per share. He now owns more than 16,000 shares through both direct and indirect holdings.
In addition, over 15 major hedge funds are long in the stock. Big names betting on the firm include Chuck Royce (972,700 shares), Cliff Asness (740,957 shares), and David Dreman (642,900 shares). However, once again, analysts are not so fond of this stock, and expect it to perform in line with the market. Moreover, several other hedge funds, including Jim Simons’ Renaissance Technologies and Israel Englander’s Millennium Management, have been significantly reducing their bets on the company lately. This one certainly requires further research.
Disclosure: Javier Hasse holds no position in any stocks mentioned
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