An Insider Bought Shares of M&T Bank

A Form 4 filed with the SEC has disclosed that Richard King, a member of M&T Bank Corporation (NYSE:MTB)’s Board of Directors, directly purchased 1,250 shares of stock on March 12^th at an average price of $104.17 per share. He now owns close to 18,000 shares of the stock. M&T Bank is a regional bank holding company concentrated in the mid-Atlantic region. Our database of insider trading filings shows that King had most recently bought shares at two points in August 2011: early in the month, when the stock was at about $80, and then at prices close to $70 towards the end of the month. M&T is up about 20% since the first of those purchases, about even with the market. Insider purchases are often considered bullish signals because the insider in question should be particularly confident in the company in order to ignore the benefits of diversification, and studies generally show a small outperformance effect. Read our analysis of studies on insider trading.

M&T Bank Corporation’s earnings rose 20% last year compared to 2011, buoyed by a particularly strong improvement in Q4 2012 relative to a year earlier. This is the result of a rise in net interest income as well as other sources of revenue, and was only partially offset by a small increase in compensation and other operating costs. The company’s trailing earnings multiple is 14, which puts it in value range in absolute terms but actually represents a more expensive valuation than what we see at many large banks. Perhaps oddly for a bank, M&T is actually close to being a defensive stock with a beta of 0.6 and a dividend yield of 2.7%. So perhaps we should think of it as being more insulated from the economy and performing well, and therefore being worth a premium to the megabanks.

We track 13F filings from hedge funds and other notable investors for a variety of purposes, including our work developing investment strategies based on the included information (for example, the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year). We can also use these filings to identify large holdings of M&T Bank Corporation. It turns out Warren Buffett is a fan of the stock: his Berkshire Hathaway reported owning 5.4 million shares at the end of December (see Buffett’s stock picks). Billionaire Ken Griffin’s Citadel Investment Group increased its stake in M&T Bank to a total of 1.3 million shares (find Griffin’s favorite stocks).