If a CEO is spending millions of dollars on company stock, investors should take note. CEOs tend to be way ahead of analysts and portfolio managers when it comes to the performance of their companies and their stock purchases can provide valuable trading signals.
In this report, we are going to highlight a large CEO purchase at Truist Financial Corp (TFC:US). Truist Financial is a bank holding company that was formed in 2019 as the result of the merger of BB&T and SunTrust Banks. One of the largest banks in America by assets, it operates nearly 3,000 branches across the US, offering a range of services including consumer and commercial banking, securities brokerage, asset management, and insurance services. It is listed on the New York Stock Exchange and currently has a market capitalization of $85.3 billion.
Truist Financial: Insider Buying
Our data shows that on October 18, Truist CEO William H. Rogers bought 67,000 TFC shares at a price of $61.85 per share. This trade cost the insider $4.1 million and increased his holding to 712,513 shares.
Mr. Rogers has significant company and industry experience, so he is likely to have a good understanding of his firm’s prospects. Before being appointed CEO of Truist in September, he served as President and Chief Operating Officer of the company for nearly two years. Before this, he served as SunTrust Banks’ Chairman and CEO.
What stands out about this trade from Mr. Rogers is its size. Our records show that it represents the largest insider purchase at Truist since the company was formed. The fact that Mr. Rogers has spent such a large amount of money on shares – and increased the size of his position by 10% – suggests that he is confident the stock is going higher.
7% Increase in Dividend
Truist Financial recently posted a strong set of Q3 results.
For the period, net income available to common shareholders amounted to $1.6 billion, up 51% year on year. Meanwhile, earnings per diluted common share amounted to $1.20, an increase of 52% compared with the same period last year. Net charge-offs for Q3 totaled $135 million compared to $326 million in Q2, while return on average tangible common shareholders’ equity came in at 19.3%, versus 18.9% in Q3 2020.
On the back of these strong results, the group raised its dividend by 7%.
"Truist produced solid results in the third quarter, driven by strong fee income from our diverse business mix - including wealth, insurance brokerage, investment banking, and positive trends in a number of other businesses given improving economic conditions," commented Mr. Rogers. “We continue to make great progress,” he added.
In light of these strong results, we see the insider buying from the CEO as a bullish indicator.