Tracking insider purchases is a fundamental task for any good investor, as it can provide great ideas that go beyond usual options. Let’s, thus, take a look at two U.S. national commercial banks that saw their insiders buy their stock this week.
Firstmerit Corp (NASDAQ:FMER) is a $3.16 billion market cap bank holding company. On April 24, Russ Strobel, Board Director, acquired 5,000 shares of the company’s, for $19.08 apiece. He now owns 16,578 shares of the company.
Despite the fact that the company’s fundamentals do not look good (margins and returns are below industry averages), and growth prospects, just fine, but not amazing, Mr. Strobel seems bullish about this company. Opinion among analysts is quite divided, although recommendations tend towards a “buy.” In addition, several major hedge funds are betting on this stock. Ken Fisher‘s Fisher Asset Management is the largest hedge fund shareholder, with 3.43 million shares, worth more than $65 million. Ken Gray and Steve Walsh‘s Bryn Mawr Capital, for its part, upped recently its stakes by 7%, to 479,581 shares. Moreover, Jim Simons‘ Renaissance Technologies started a position in the stock over the last reported quarter, with 479,141 shares, while Israel Englander’s Millennium Management initiated one with 384,495 shares.
The second company in this list is Horizon Bancorp (NASDAQ:HBNC), a $172 million market cap bank holding company that provides various banking services in Northwestern and Central Indiana and Southwestern Michigan through its bank subsidiary, Horizon Bank, N.A. and other affiliated entities. In this case, there are two Board Directors that seem to feel bullish about this stock. On April 24, Robert Swinehart acquired 1,000 shares of Common Stock for $20.45 per share. Following this transaction, the insider owns 32,120 shares of the company, worth more than $640,000. On the following day, Lawrence Burnell purchased another 1,000 shares of Common Stock, for $20.50 each. His holdings now add up to 11,838 shares.
In this case, the purchase makes sense from a fundamental point of view. The company’s margins and –especially- returns surpass industry averages comfortably, while its stock still trades below mean valuations (at 9.3x P/E, and 2.1x P/B).
And, although there are not many major funds betting on this micro-cap company yet, the firm does count with the backup of Jim Simons, who last reported having increased his stakes by 3%, to 59,289 shares. With Jim Simons and insiders trusting this stock, should you too?
Disclosure: Javier Hasse holds no position in any stocks mentioned