Insider purchases tend to be bullish signals (read more about insider trading) and consensus insider purchases- when multiple insiders buy the stock within a fairly short time frame- are particularly interesting events. Learn more about consensus insider buying. We believe that these stocks tend to perform well following insider purchases because the transactions themselves signify confidence in the company- otherwise, the insiders would prefer to diversify their wealth away from being concentrated in one single business as per economic theory. In any case, we track consensus insider purchases and take a brief look at the companies involved so that investors can review them quickly and decide whether or not to research them further. Here are five finance and insurance stocks that multiple insiders have bought in the last three months:
We have recorded multiple insiders buying shares in Citigroup Inc. (NYSE:C) within the last three months. Even though its stock price has risen 33% in the last year, the megabank still trades at a significant discount to the book value of its equity with a P/B ratio of 0.7. Citigroup was one of the most popular stocks among hedge funds in the third quarter of 2012, joining other large banks on our top ten list (see more stocks hedge funds loved). Billionaire David Tepper’s Appaloosa Management was one of the funds reporting a large position in the company (check out Tepper’s stock picks). In the fourth quarter of 2012, Citi reported a 25% increase in earnings compared to the same period in 2011.
Another bank- though a considerably smaller one- which insiders have been buying is TCF Financial Corporation (NYSE:TCB). TCF, as the holding company for TCF National Bank, is based in the Midwestern U.S. (almost half of its retail branches are in Illinois). Unlike Citigroup, TCF is valued at a premium to the book value of its equity- the P/B ratio is 1.3. The company is unprofitable on a trailing basis due to a bad quarter in the first three months of 2012, but Wall Street analysts believe that TCF is performing more strongly now. Their expectations for 2013 imply a current-year P/E multiple of 14.