David Yost, a member of Bank of America Corp (NYSE:BAC)’s Board of Directors, purchased 20,000 shares of stock on April 18th at an average price of $11.51 per share according to a Form 4 filed with the SEC. We track insider purchases because it generally doesn’t make sense for insiders to increase their company-specific risk rather than diversify unless they are confident in the company’s prospects. In fact, studies show that stocks bought by insiders narrowly outperform the market (read our analysis of studies on insider trading). Yost had previously bought 20,000 shares of Bank of America Corp (NYSE:BAC) this past January at a similar price, and 10,000 shares in early November at about $9.50 per share. See a history of insider purchases at Bank of America.
The bank reported considerable improvement in its financials in the first quarter of 2013, with revenue growing 17% versus a year earlier on strength in noninterest income. Lower noninterest expenses and credit loss provisions contributed to an abnormally high percentage increase in earnings. While Bank of America Corp (NYSE:BAC) is up 43% in the last year, it is still trading well below the book value of its equity at a P/B ratio of 0.6, meaning there is at least some case for upside potential on asset value alone (though Bank of America does not have a good reputation compared to some other U.S. banks). Analyst expectations imply a forward P/E of 9, which is certainly interesting in absolute terms but is actually about in line with the bank’s peers including some which investors might find more reliable.
Bank of America Corp (NYSE:BAC) had been one of the most popular financial stocks among hedge funds in the fourth quarter of 2012 (find more financial stocks hedge funds loved), according to the database of quarterly 13F filings from hedge funds and other notable investors we maintain to help us develop investing strategies (the most popular small cap stocks among hedge funds, for example, earn an average excess return of 18 percentage points per year). Out of the major shareholders of Bank of America Corp (NYSE:BAC), billionaire Kerr Neilson’s Platinum Asset Management reported ownership of over 37 million shares at the end of December (check out Platinum’s stock picks). Moore Global, managed by billionaire Louis Bacon, initiated a position of almost 12 million shares (research more stocks Bacon was buying).