5 Financial Stocks With Recent Large Insider Buying

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Includes: AGNC, CYS, JPM, USB, WFC
by: Brian Gorban

Below are companies that have recently had large insider buying in excess of $500,000 worth of stock. As a caveat, please only consider this as a starting point in your investment research as these are only the opinions of this blogger:

CYS Investments (CYS) is a mortgage real estate investment trust (i.e. "m-REIT") that buys agency backed residential mortgages in the United States. The company's stock has not performed too well the past year currently sitting just above its $11.45 52-week low. However, board director Jeffrey Hughes thinks the stock will be moving higher in the near future. Mr. Hughes bought a sizeable 50,000 shares collectively from May 6-7 equating to approximately $600,000 worth of stock. The stock looks reasonably priced at just .95x price to book value and a 6.5x trailing P/E. In addition, the company is sporting very nice profit margins the trailing twelve months of 155% and returns on equity exceeding 14%. Lastly, the company should see a rise in its funds from operations "FFO" as the Federal Reserve looks more likely to unwind its quantitative easing program. I think the stock is worth a look along with fellow competitor American Capital Agency (AGNC) which has really gone on sale.

American Capital Agency is virtually identical to CYS investing in agency backed residential mortgages throughout the United States. Like CYS, the company has recently come down considerably in price and now sits just about 3.5% above its $28.08 52-week low. Despite the negativity surrounding this stock, the company now trades at a historically cheap 1x price to book value. In addition, the company has a 16.5% dividend, which of course greatly exceeds most other asset returns available to investors. As a caveat though, as is the case with all mortgage REITs, the dividends these companies pay are rather volatile so due diligence as always is necessary.

JPMorgan Chase (JPM) is a worldwide financial conglomerate that has been in existence for almost 200 years since its founding in 1823. This Dow behemoth has since grown to churn over $90 billion annually in sales and a market capitalization at approximately $185 billion. The stock has performed well as it is closing in on its $51.0 52-week high. Board director James Crown sees the stock apparently moving higher. On May 3 he bought a massive 301,477 shares equating to over $14.2 million worth of stock following this other recent insider's purchase. The company has been performing well as it has smashed consensus estimates in each of the last four quarters. Moreover, the company still trades at a relatively cheap .95x price to book. Perhaps most importantly, management just recently raised the dividend yet again and now has it sitting at a nice 3.1% yield. I think this stock is worth a look and if wisely looking to diversify, Wells Fargo (WFC) and US Bancorp (USB) are both definitely worth a look.

Wells Fargo is no slouch in size as well with an annual revenue base and market capitalization at $80 billion and $200 billion respectively. The company perhaps most notably has the nice distinction of being the largest holding of Warren Buffett's Berkshire Hathaway (BRK.B). Like JPMorgan, the company has beaten consensus analyst estimates in each of the last four quarters. The company trades at a considerable premium of 1.35x price to book, however, that is somewhat justified as the firm has superior margins and returns on assets. Lastly, the company also sports a rising 3.2% dividend yield making this a nice income holding.

U.S. Bancorp is another financial giant that lists Berkshire Hathaway as a major shareholder. The company is considerably smaller than the firms mentioned above with an annual revenue base of $17.5 billion and market capitalization just over $60 billion. However, the company has considerably better operating margins of over 45% and returns on equity exceeding 14%. In addition, it has a growing 2.3% dividend yield which at only a 27% payout ratio, should continue to grow.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CYS, AGNC, JPM, WFC, USB over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.