Insider Buying

Regional Management Corp insider buys $509k worth of stock

Regional Management Corp
(RM:US)
12 months:
-33.76%
Activity:
Bullish
Pattern:
Purchases from board member
News:
Q2 results
Regional Management Corp
(RM:US)
12 months:
-33.76%
Activity:
Bullish
Pattern:
Purchases from board member
News:
Q2 results
Image shows a person is calculating his finance by using a calculator in the background with a layer of blue colour on top

Insider buying can provide clues about a stock’s next move. Insiders sell company stock for a number of reasons. Yet they only buy stock for one reason – they expect it to rise.

In this report, we are going to highlight some interesting insider buying at Regional Management Corp (RM:US). Regional Management is a diversified consumer finance company that provides installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders. It’s listed on the New York Stock Exchange and currently has a market cap of $362 million.

Insider buying at Regional Management

Our data shows that between August 16 and August 19, board member Philip Bancroft purchased 26,000 RM shares at an average price of $39.01 per share. This trading activity cost the insider approximately $1 million and increased his holding to 29,605 shares.

High-conviction trade

This is a high-conviction trade from Mr. Bancroft. Not only has the insider invested over half a million dollars in company stock, but he has also increased the size of his holding substantially. The size of the trade suggests that he is very confident the stock is set to move higher.

It’s worth noting that Mr. Bancroft has a financial background. Previously, he was CFO at Chubb Corporation. Before this, he served as Partner-in-Charge for the New York Regional Insurance Group of PricewaterhouseCoopers (PWC). So, he is likely to have a good understanding of Regional Management’s financials.

Better-than-expected results

Regional Management recently produced a solid set of Q2 results that were ahead of expectations.

For the quarter, revenue came in at a record $122.9 million, up 23% year on year and ahead of the consensus forecast of $121.4 million. Meanwhile, earnings per share amounted to $1.24, ahead of the $1.01 consensus forecast. At the end of the period, the company’s loan portfolio was worth $1.53 billion – an all-time high – while active accounts were up 19% year on year.

“We continued to execute well on our strategic plans and delivered strong results in the second quarter, including disciplined, controlled growth of our portfolio,” commented Robert W. Beck, President and CEO.

Looking ahead, management was confident about the future, despite the fact that economic conditions are deteriorating.

“While the economic environment is difficult, our investments in improved credit models, years-long shift to large and sub-36% loans, and recent credit tightening actions have contributed to an overall higher-quality portfolio compared to pre-pandemic periods,” said Mr. Beck. He added that the company is positioned well to grow its business, expand market share, and create value for shareholders.

In light of these results, and the fact that stock is trading at a very low valuation right now, we see the insider buying here as a bullish indicator.

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