Corporate executives and directors tend to have superior information in relation to their firms’ operating activities. If these insiders are buying company stock, it’s generally a bullish signal.
In this report, we are going to highlight some interesting insider buying at Western Alliance Bancorporation (WAL:US). Western Alliance is an American bank holding company. Its primary subsidiary, Western Alliance Bank, offers customers a full spectrum of customized loan, deposit, and treasury management capabilities, including blockchain-based offerings. The company is listed on the New York Stock Exchange and currently has a market capitalization of $8.5 billion.
Western Alliance Bancorp: Insider Buying
Our insider transaction data shows that on April 28, Chief Accounting Officer James Ardrey snapped up 3,000 WAL shares at a price of $78.67 per share. This trade cost the insider $236,010 and increased his holding to 6,090 shares.
Bullish Trading Activity
This trading activity is worth highlighting for a number of reasons.
Firstly, Mr. Ardrey is a top-level insider with considerable company and industry experience. He has served as Chief Accounting Officer at the group since 2011 and before this, was CFO of Bank of Nevada, one of its subsidiaries. Before joining Western Alliance, he held positions at Fannie Mae, Suntrust Bank, First Union Bank, Sterne, Agee & Leach, Protective Life and Coopers & Lybrand. So, he is likely to have a good understanding of his company’s prospects.
Secondly, this trade has boosted the size of his holding by 97%. The fact that the insider has upped his stake by such a large percentage suggests that he is very confident the stock is set to move higher.
Third, Mr. Ardrey is not the only top-level insider to buy stock here recently. In March, both Chairman Robert Sarver and CFO Dale Gibbons bought stock. Meanwhile, in late January, CEO Kenneth Vecchione bought stock. This tells us that there’s a consensus of opinion within the company that the stock is undervalued right now.
Solid Q1 Results
Western Alliance recently posted a solid set of results for the first quarter of 2021.
For the period, net revenue was $555.8 million, up 65% year on year, and above analysts’ estimate of $543 million. Meanwhile, earnings per share came in at $2.22, up 16.8% year on year, and above the consensus forecast of $2.06.
During the period, the group increased its held for investment (HFI) loans by $2.0 billion to $41.1 billion, while it increased its deposits by $4.5 billion to $52.2 billion.
The company noted that asset quality remained strong with nonperforming assets to total assets of 0.17%, compared to 0.27% a year earlier and negligible net charge-offs for the quarter.
“Western Alliance's national commercial business strategy continued to deliver accelerating balance sheet growth, surpassing the $60 billion asset milestone, and strong financial performance results to kick off 2022,” commented Kenneth A. Vecchione, President and Chief Executive Officer.
Despite the solid performance here, the stock has underperformed this year on the back of macroeconomic concerns. Year to date, it has fallen around 30%. As a result, it now trades at just 7.7 times this year’s forecast earnings.
Clearly, Mr. Ardrey sees value in the stock after the recent pullback. We see this insider buying activity as a bullish indicator.