Insiders Are Dumping These 12 Financial Stocks

Published on March 31, 2024 at 8:19 am by Fahad Saleem in Hedge Funds, Insider Trading, News

In this article, we will take a detailed look at Insiders Are Dumping These 12 Financial Stocks. For a quick overview of such stocks, read our article Insiders Are Dumping These 5 Financial Stocks.

Several market analysts and experts now believe the stock market is headed for a pullback. They say valuations are stretched and the AI-led rally has gone too far and warrants a breather. A majority of investors in CNBC’s latest Delivering Alpha Stock Survey said the market is nearing a pullback. According to a latest Wall Street Journal report, Lori Calvasina at RBC Capital Markets said that they believe the current sentiment is “stretched” and a pullback in stocks is “overdue.” What direction the market takes in the coming weeks and months would depend Q1’2024 earnings. However, some analysts are seeing the expected pullback as a buying opportunity.

Piper Sandler said in a latest report that it expects a “healthy” market correction” if macro data comes in weaker than expected.

“We remain constructive with the view that lower rates from softer macro data will set up stocks for another leg higher in the coming quarters,” Piper Sandler analysts said.

Bank and financial stocks would be in the limelight in the coming weeks as the Fed prepares to start cutting interest rates. Deloitte said in a report earlier this year that elevated interest rates have been a “boon” for banks, with banks in America and Canada seeing a whopping 18% YoY increase in net interest income in 2022. However, the report said that margins took a hit amid rising costs of interest-bearing deposits for US banks. The report said that banks will have to find ways to boost their noninterest income this year:

“Banks should prioritize noninterest income in 2024 to make up for the shortfall in net interest income. Noninterest income is expected to grow meaningfully in the next few years. Most banks will seek to raise fee income through a variety of channels, but they may face some constraints in doing so. Consumer-focused fees, such as overdraft fees, nonsufficient funds fees, and credit card late fees, could attract regulatory scrutiny.

However, banks with stronger advisory, underwriting, and corporate banking franchises should have more room to grow their fee income. Clearer valuations and a backlog of deals should lead to higher M&A and issuance activities in the United States, boosting fees. However, reduced volatility across different products will crimp revenue growth in both equities and FICC (fixed income, commodities, and currencies) trading.”

Photo by AlphaTradeZone

Methodology

In this article we will take a look at some financial stocks that recently saw insider selling activity. For that we used Insider Monkey’s insider trading screener to find financial stocks (banks, financial services companies, insurance companies, crypto companies) that saw insider selling over the past few weeks. From these we picked 12 stocks with the highest insider selling activity in terms of dollar value. Some top names in the list include Coinbase Global Inc (NASADQ:COIN), Mastercard Incorporated (NYSE:MA) and CME Group Inc (NASDAQ:CME). But why is it important to keep tabs on hedge fund and insider activity? Hedge funds’ top 10 consensus stock picks outperformed the S&P 500 Index by more than 140 percentage points over the last 10 years (see the details here).

12. Stronghold Digital Mining Inc (NASDAQ:SDIG)

Number of Hedge Fund Investors: 3

Bitcoin mining company Stronghold Digital Mining CEO Gregory A. Beard on March 18 sold 35,896 shares of the company at $3.96 per share. Since then the stock is up 6%. The company’s Senior VP Richard Shaffer on March 18 also sold 2,083 shares of the company at $3.96 per share.

In addition to SDIG, Coinbase Global Inc (NASADQ:COIN), Mastercard Incorporated (NYSE:MA) and CME Group Inc (NASDAQ:CME) are also seeing insider selling activity.

11. NewtekOne Inc (NASDAQ:NEWT)

Number of Hedge Fund Investors: 7

Financial services company NewtekOne Inc (NASDAQ:NEWT) is one of the financial stocks with recent insider selling activity. Salvatore Francis Mulia, a board member at NewtekOne Inc (NASDAQ:NEWT), dumped 750 shares of NewtekOne Inc (NASDAQ:NEWT) on March 21 at $10.71 per share. Since then the stock price is almost flat.

As of the end of the last quarter of 2023, seven hedge funds out of the 933 funds tracked by Insider Monkey had stakes in NewtekOne Inc (NASDAQ:NEWT).

In a recent earnings call the company talked about guidance:

“We’re excited about our 2024 forecast. We’re losing some amortization and depreciation. Pre-tax income jumped of hopefully 16 million for the calendar year, up from 12.9 million in the year [indiscernible]. The insurance agency, a nice increase. Now, the insurance agency and the payroll business are going to be benefiting from the bank relationship. So we hope to a) open up a ton of accounts where people looking to insure themselves, they see it, it’s there. We’ll talk in future calls about the connectivity between the agency and the lender, the connectivity between the payroll company and the lender, and both these entities in connection to the bank. Both of these entities are held up at NewtekOne at the HoldCo. Slide number 23, basically the key financial metrics projections for 2023 in the model, what we had for 2024 projection and forecast and what we did for 2023 for the quarter and the fourth and for the full year in 2023.

You could get a good feel for where we’re going. We’re forecasting for 2024, $1.80 to $2 in basic and diluted common shares for the calendar year. We’ve got them spread out quarter by quarter. There is seasonality here.”

Read the full earnings call transcript here.

10. Bitcoin Depot Inc (NASDAQ:BTM)

Number of Hedge Fund Investors: 13

Cryptocurrency-related platform and services company Bitcoin Depot Inc (NASDAQ:BTM) is one of the stocks in the financial industry that recently saw insider selling activity. Bitcoin Depot Inc’s (NASDAQ:BTM) COO Scott Buchanan on March 21 sold 15,488 shares of Bitcoin Depot Inc (NASDAQ:BTM) at $2.59 per share. Since then through March 26 the stock has lost about 17% in value.

As of the end of the fourth quarter of 2023, 13 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in Bitcoin Depot Inc (NASDAQ:BTM). Like BTM, Coinbase Global Inc (NASADQ:COIN), Mastercard Incorporated (NYSE:MA) and CME Group Inc (NASDAQ:CME) also recently saw insider selling.

9. Home Bancshares Inc (NYSE:HOMB)

Number of Hedge Fund Investors: 15

Arkansas-based bank holding company Home Bancshares Inc (NYSE:HOMB) ranks ninth in our list of the financial stocks with recent insider selling activity. On March 21, Donna J. Townsell, SEVP and Director of Investor Relations, sold 281,198 shares of Home Bancshares Inc (NYSE:HOMB) at $23.76 per share. Since then the stock price hasn’t seen any significant changes.

ClearBridge Small Cap Value Strategy made the following comment about Home Bancshares, Inc. (Conway, AR) (NYSE:HOMB) in its Q3 2023 investor letter:

“We made a number of moves within financials to favor banks with rising net interest margins, higher capitalization ratios and lower-risk securities portfolios. As a result, we exited positions in WesBanco (WSBC), Simmons First National (SFNC) and Webster Financial (WBS) in favor of several new additions, including Home Bancshares, Inc. (Conway, AR) (NYSE:HOMB). A full-service financial firm offering commercial and retail banking as well as financial services to businesses, real estate developers and investors under Centennial Bank, Home BancShares operates bank branches in Arkansas, Florida, Alabama, Texas and New York. We believe Home BancShares increases our exposure to banks with relatively high net interest margins and lower interest-rate risk in their securities portfolios and we believe the company’s long history of excellent credit underwriting should serve it well if the economy tips toward a recession.”

8. NMI Holdings Inc (NASDAQ:NMIH)

Number of Hedge Fund Investors: 23

Mortgage guaranty insurance services company NMI Holdings Inc (NASDAQ:NMIH) saw insider selling activity on March 21 when its EVP and Chief Risk Officer Robert Owen Smith sold 3,000 shares of NMI Holdings Inc (NASDAQ:NMIH) at $31.19 per share. The stock is up 0.3% since then.

As of the end of the last quarter of 2023, 23 hedge funds out of the 933 funds tracked by Insider Monkey had stakes in NMI Holdings Inc (NASDAQ:NMIH). The biggest stakeholder of NMI Holdings Inc (NASDAQ:NMIH) is Howard Marks’s Oaktree Capital Management which owns a $139 million stake in NMI Holdings Inc (NASDAQ:NMIH).

7. Ares Management Corp (NYSE:ARES)

Number of Hedge Fund Investors: 29

California-based alternative investment manager Ares Management Corp (NYSE:ARES) is among the stocks that saw insider selling activity as Antony Ressler, the cofounder and executive chairman of Ares Management Corp (NYSE:ARES), unloaded 78,242 shares of Ares Management Corp (NYSE:ARES) at $131.84 per share on March 15. On March 18, Ares’ CEO Michael J. Arougheti sold 39,664 shares of Ares Management Corp (NYSE:ARES). Since March 15, Ares Management Corp (NYSE:ARES) stock has gained about 1.99%.

6. Nasdaq Inc (NASDAQ:NDAQ)

Number of Hedge Fund Investors: 30

Bryan Smith, EVP at Nasdaq Inc (NASDAQ:NDAQ), on March 1 sold 2,064 shares of Nasdaq Inc (NASDAQ:NDAQ) at $56.29 per share. Since then the stock price has jumped about 10%.

TimesSquare Capital U.S. Mid Cap Growth Strategy made the following comment about Nasdaq, Inc. (NASDAQ:NDAQ) in its Q3 2023 investor letter:

“In Financials, we prefer well-placed insurance companies and niche businesses while tending to avoid banks which face credit deterioration and rising deposit costs. Partially countering these positives was Nasdaq, Inc. (NASDAQ:NDAQ), which is engaged in trading, clearing, exchange technology, regulatory, securities listing, and company services. Its shares pulled back by -2% despite reporting an upside to consensus projections, driven by stronger trends in their solutions business.”

Click to continue reading and see Insiders Are Dumping These 5 Financial Stocks.

AI Fire Sale: Insider Monkey’s #1 AI Stock Pick Is On A Steep Discount

Published on May 1, 2024 at by Inan Dogan, PhD

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A New Dawn is Coming to U.S. Stocks

Published on May 2, 2024 at by Insider Monkey Staff

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Click to continue reading…

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