Insider Buying

Four insiders at Bank of Nova Scotia just bought stock

Bank of Nova Scotia
(BNS:CN)
12 months:
-14.17%
Activity:
Bullish
Pattern:
Purchases from multiple insiders including CEO and Chairman
News:
Q3 results
Bank of Nova Scotia
(BNS:CN)
12 months:
-14.17%
Activity:
Bullish
Pattern:
Purchases from multiple insiders including CEO and Chairman
News:
Q3 results
The image's background depicts Scotiabank Retail Location , with the blog introduction mentioning the multiple insider's investment of $4.7 million on top.

If multiple insiders at the same organization are buying company stock simultaneously, it’s often worth taking a closer look. This buying pattern – which is known as ‘cluster buying’ – is a particularly strong insider trading signal.

In this report, we are going to highlight an interesting cluster buying pattern at c (BNS:CN). Bank of Nova Scotia is a Canadian bank that offers personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets solutions across the Americas. The company, which has assets under management of around $1.3 trillion, is listed on the Toronto Stock Exchange and currently has a market cap of $79 billion.

Insider buying at Bank of Nova Scotia

Our data shows that on September 28 and October 3, five insiders bought stock near the CAD $67 / USD $49 level. Those purchased shares were:

  • CEO Brian Porter (6,000 shares)
  • Chairman Aaron Regent (29,900 shares)
  • Board member Wendell Dave Dowrich (193 US-listed shares)
  • Board member Calin Rovinescu (3,000 shares)
  • Board member Lawren Scott Thomson (30,765 shares)

Combined, the five insiders invested around CAD $4.7 million (USD $3.37 million) in stock.

Capital markets experience

This cluster of purchases is worth highlighting due to the fact that all of these insiders have significant capital markets experience.

Mr. Porter has served as CEO of the bank since 2013 and before this, served as the Bank’s Chief Risk Officer, Group Head of Risk and Treasury, and Group Head of International Banking.

Mr. Regent was previously Senior Managing Partner of Brookfield Asset Management and Co-CEO of the Brookfield Infrastructure Group.

Mr. Dowrich is currently Senior Executive Vice President and CFO of Teachers Insurance and Annuity Association of America - College Retirement Equities Fund (TIAA). Earlier in his career, he held senior roles in investment banking at Goldman Sachs and Credit Suisse.

And Mr. Rovinescu is a venture capital investor and senior advisor to several corporations.

The fact that these insiders have invested around CAD $2.7 million in stock now is therefore notable. Our Insider Model views this buying activity as bullish.

Solid Q3 results

Bank of Nova Scotia’s most recent quarterly results were solid.

For the three months ended July 31, net income was $2,594 million compared to $2,542 million in the same period last year while diluted earnings per share (EPS) were $2.09, compared to $1.99 in the same period a year ago.

Encouragingly, Canadian Banking earnings were up 12% year on year, underpinned by strong net interest income growth and 14% loan growth. Meanwhile, International Banking earnings were up 28%, driven by higher net interest income with loans growing at 12%.

Adjusted return on equity for the period was 15.4% compared to 15.1% a year ago.

“The quarter saw EPS growth of 4% and a return on equity of 15.4%. Strong credit quality, while growing the loan book across all business lines, prudent expense management and resilient customers were positive highlights against the backdrop of a more challenging macro environment this quarter,” commented Mr. Porter.

These results weren’t enough to stop the slide in the bank’s share price, however. Since the start of April, the stock has fallen from above CAD $90 to $65.

The buying from insiders suggests that they see a lot of value in BNS stock after its recent fall.

Given their experience in the capital markets industry, we see their buying activity as a bullish indicator.

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