If corporate executives and directors are offloading company stock, it can pay to approach the stock with caution. Insider sales can be a sign that the stock is overvalued or that the outlook for the company is deteriorating.
In this report, we are going to highlight some bearish insider sales at WSFS Financial Corporation (WSFS:US). WSFS Financial is a bank holding company. Its primary subsidiary, Wilmington Savings Fund Society, provides a range of financial services including commercial banking, retail banking, and wealth management across Pennsylvania, Delaware, New Jersey, Virginia, and Nevada. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $2.5 billion.
WSFS Financial Corp: Insider Selling
Our insider transaction data shows that since mid-March, insiders at WSFS Financial have been aggressively selling stock. One insider, in particular, that has offloaded a large amount of stock is ex-CEO Mark Turner. Since mid-March, he has sold approximately $6.7 million worth of WSFS stock, reducing the size of his position from 144,069 shares to just 14,742 shares. Chief Retail Banking Officer Richard Wright and Enterprise Risk Management head Paul Greenplate have also sold stock.
Top-level Insiders
All three of these insiders are likely to have a good understanding of WSFS’s recent performance and future prospects. Previously, Mr. Turner was Executive Chairman of the WSFS Board of Directors. Prior to that, he was Chairman, President and Chief Executive Officer of WSFS. He has also served as CFO in the past. Mr. Wright, meanwhile, has served as Chief Retail Banking Officer since 2006. Mr. Greenplate joined the company in 1999 and was previously Chief Risk Officer. The fact that all three of these insiders have been offloading stock simultaneously is a bit concerning, in our view.
Legal Investigation
In March, WSFS announced plans to merge with Bryn Mawr Bank Corporation. The bank advised that the deal would solidify its position as the premier bank and wealth management franchise in the greater Philadelphia and Delaware region and that it would be accretive to earnings per share in 2022.
However, some analysts have expressed concerns about the terms of the merger. WSFS is paying $48.55 per share for Pennsylvania-based Bryn Mawr, a price that values it at 229% of its tangible book value. A number of brokers have downgraded the stock since the merger was announced.
It’s worth noting that Halper Sadeh LLP, a global investor rights law firm, is investigating whether the merger is fair to WSFS shareholders. Under the terms of the agreement, stockholders of Bryn Mawr will receive 0.90 shares of WSFS common stock for each share of Bryn Mawr common stock.
Halper Sadeh has advised that it is investigating whether WSFS and its board of directors violated the federal securities laws and/or breached their fiduciary duties to shareholders by failing to obtain the best possible consideration for WSFS shareholders, and disclose all material information necessary for WSFS shareholders to adequately assess and value the merger consideration. It has said that it may seek increased consideration for shareholders, additional disclosures and information concerning the proposed transaction, or other relief and benefits.
In light of this investigation, we see the insider selling here as bearish.
