Insider Buying Goes Up in the Finance Sector Post-SVB Collapse

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The recent collapse of SVB Financial Group (SIVB:US) has sent investors and spectators alike into a frenzy. The Group was a service provider for a large number of tech startups in the US and has raised questions about the future of the banking business. The saga began on March 8, when SVB Financial announced an offering of its common shares and depositary shares.

Less than a week ago, SIVB shares closed nearly 60.41% lower in a day on March 9, 2023, Friday. In a domino effect, the stocks of other banks closed lower as well, wiping out a significant chunk of their Market Caps. JP Morgan Chase & Co (JPM:US) closed 5.41% lower while Bank of America (BAC:US) declined by 6.20%.

Banking Industry Insiders

More often than not, a company Insider tends to walk differently than anyone else in the market. This could be because they have a greater knowledge of the company's operations and investment prospects.

At present, JPM and BAC are still among those banks possessing a higher M Cap which might shield them from the ongoing storm. More and more investors and depositors have been flocking to bigger banks as a result. Insiders are no different, as a large chunk of people in the banking industry were seen purchasing company stocks in the past week. What’s interesting is that Regional banks are following suit; insider buying at smaller-scale banks has also surged significantly.

Overall, insider buying has risen in the financial sector as a whole. A graph that depicts the change over time is below:

Five Interesting Insider-Buying Cases

Looking at 2iQ’s data, Analysts found a long list of insiders purchasing company stocks. For regional banks to put up this front could be a risky move, but it might also be a show of confidence in their company’s stock. Here are insights into insider activity where the stock purchases amounted to millions followed by a slight recovery:

Schwab (Charles) Corp (SCHW:US)

With a current Market Cap of $111.82 billion, Charles Schwab Corp. was founded in 1971.

On March 14, 2023, Charles Schwab saw its first case of cluster buying in a long time:

  • Director Todd M. Ricketts stocked up on 10,000 shares (@ a value of $56.79), in his first purchase of SCHW stock in a while.

  • Peter B. Crawford, company CFO, bought 5,000 shares (@ a value of $57.96).

  • Another Director, John K. Adams II purchased 5,000 shares (@ a value of $59.31).

  • CEO Walter W. Bettinger II made the heftiest purchase; buying 50,000 shares (@ a value of $59.31).

  • Richard A. Wurster, the company President, bought 5,000 shares (@ a value of $57.28)

  • Director Stephen A. Ellis purchased 6,757 shares (@ a value of $56.08)

In total, all six insiders invested almost $4.78 million in SCHW. To add to this, on the same day as these insider purchases, the stock closed at $56.68, marking a rise of 9.18% in a single day.

Cullen/Frost Bankers Inc (CFR: US)

Bearing a history of more than 150 years, Cullen/Frost presently has a Market Cap of almost $7.18 billion. The Texas-based company too saw a large purchase by multiple insiders on March 13:

  • Independent Director, Chris M. Avery, bought 5,000 shares (@ a value of $108.09)

  • The CEO and Chairman of the Board, Phillip D. Green, bought 9,500 shares (@ a value of $106.59)

Altogether, these two transactions amounted to a value of $1.56 million. The next day, on March 14, CFR’s stock price closed at $111.52, signifying a price recovery of almost 7.49%.

SouthState Corp. (SSB:US)

Having a current Market Cap of $5.72 billion, SouthState was previously known as First Financial Holdings until 2013 when it changed its name.

In a rare case, there was only one insider at the Florida-based company who stocked up on SSB stock. G. Ruffner Page Jr, one of the company’s Directors, bought 14,000 shares (@ a value of $71.75) on March 10.

Post this, SSB stock also went on an upward turn. Comparing closing prices from March 13 and 14, the stock price rose by 9.19% in a day.

SoFi Technologies Inc (SOFI:US)

A more recent company on this list, SoFi Tech was founded in 2011 and has a current Market Cap of $4.47 billion. Not a bank, but a lending and financial services platform, SoFi’s stock too suffered under the weight of SVB’s collapse.

On March 10, the company’s top-level Insider, CEO Anthony Noto added 180,000 shares (@ a value of $5.53) to his holdings. This trade was valued at $1.0 million.

In comparison to the price fall on March 9, SOFI stock hasn’t seen much improvement since then. On March 14, the stock closed at $5.55, increasing by only 1.09% in a day. But the CEO’s million-dollar investment could be the preview of a better turn coming up.

Stifel Financial Corp (SF:US)

Founded in the late 1800s, Stifel Financial possesses a current Market Cap of $6.30 billion.

On three separate dates, Stifel’s CEO and Chairman, Ronald J. Kruszewski bought SF stock in four transactions amounting to a hefty investment:

  • On March 10, the CEO bought 10,000 shares (@ a value of $59.00).

  • On March 13, he purchased 2,500 shares (@ a value of $55.00).

  • On March 14, he made two transactions where he bought a total of 7,674 shares (@ values of $58.38 and $57.00 respectively).

Comparing SF stock’s run on March 13 and 14, the stock price closed at $58.99. This marked a recovery of almost 7.04% in a single day.

These five companies were only the tip of the iceberg. Below is a table that shows 25 companies where Insiders made high-value purchases: