Seeking Alpha
Long/short equity, insider ownership
Profile| Send Message|
( followers)  

The Financial Select Sector SPDR ETF (NYSEARCA:XLF) was trading as low as $5.88 in March 2009. The index is currently trading at $19.47, or 231.1% above the low made in March 2009.

(click to enlarge)

In this article, I will feature two financial sector stocks that have seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.

  2. The stock is sold by no insiders in the month of intensive purchasing.

  3. At least two purchasers increase their holdings by more than 10%.

1. First PacTrust Bancorp (NYSE:BANC) operates as a holding company for Pacific Trust Bank that provides retail banking services.

(click to enlarge)

Insider buying by insider (last 30 days)

  • Timothy Chrisman purchased 12,146 shares on June 7-21 and currently holds 29,483 shares or 0.2% of the company. Timothy Chrisman is the Chairman of the Board.
  • Robb Evans purchased 5,000 shares on June 13-25 and currently controls 15,000 shares or 0.1% of the company. Robb Evans serves as a director of the company.
  • James Gray purchased 1,500 shares on June 11-24 and currently controls 6,000 shares or less than 0.1% of the company. James Gray serves as a director of the company.
  • Daniel Mathis purchased 3,300 shares on June 12 and currently controls 6,300 shares or less than 0.1% of the company. Daniel Mathis serves as a director of the company.
  • Steven Sugarman purchased 4,000 shares on June 10 and currently controls 56,975 shares or 0.4% of the company. Steven Sugarman is the Chief Executive Officer and Director of First PacTrust Bancorp.

Insider buying by calendar month

Here is a table of First PacTrust Bancorp's insider trading activity by calendar month.

MonthInsider buying / sharesInsider selling / shares
June 201325,9460
May 201300
April 201300
March 201347,9890
February 201300
January 201300

There have been 73,935 shares purchased and there have been zero shares sold by the insiders this year.

Financials

The company reported the first-quarter financial results on May 8 with the following highlights:

Net income$0.6 million
Cash$123.2 million
Debt$132.0 million

On June 28, First PacTrust Bancorp announced that the underwriters of the company's recently completed underwritten public offering exercised their overallotment option, resulting in the issuance of an additional 360,000 shares for additional gross proceeds of $4.7 million. Together with the 2.4 million shares issued on June 26 in the underwritten public offering, and the 1,153,846 shares issued on June 26 in the registered direct offering, the company issued a total of 3.9 million shares in the offering, at a price to the public of $13.00 per share, for gross proceeds of approximately $50.9 million.

News

On July 1, First PacTrust Bancorp announced that it had completed the acquisition of The Private Bank of California.

Competition

First PacTrust Bancorp's competitors include Bank of America (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM) and U.S. Bancorp (NYSE:USB). Here is a table comparing these companies.

CompanyBANCBACJPMUSB
Market Cap:161.92M138.31B199.96B67.23B
Employees:572263,000255,89864,486
Qtrly Rev Growth (yoy):2.580.150.010.01
Revenue:88.47M77.99B91.94B17.64B
Operating Margin:0.030.160.370.46
Net Income:5.30M3.54B21.43B5.46B
EPS:0.450.325.602.90
P/E:29.9840.099.4212.53
PEG (5 yr expected):0.820.571.411.31
P/S:1.841.782.183.81

First PacTrust Bancorp has the second lowest P/S ratio among these four companies.

My analysis

There have been five different insiders buying the shares and there have not been any insiders selling the shares during the past 30 days. The company has an insider ownership of 1.30%. There are six analyst buy ratings, one neutral rating and zero sell ratings with an average target price of $15.36. The stock is trading at a P/E ratio of 29.98 and a forward P/E ratio of 8.20. The company has a book value of $13.12 per share and the stock has a dividend yield of 3.56%. The 200-day moving average is currently at $11.77, which could be a good entry point for the stock.

2. Element Financial Corporation (OTC:ELEEF), an independent finance company, originates, manages, and funds equipment leases for the end-users, distributors, and manufacturers.

(click to enlarge)

Insider buying by insider (last 30 days)

  • Michel Béland purchased 208,956 shares on June 28 and currently holds 362,270 shares or 0.3% of the company. Michel Béland is Chief Financial Officer of the company.
  • Steven Hudson purchased 539,803 shares on June 28 and currently holds 2,169,188 shares or 1.7% of the company. Steven Hudson is the Chairman and Chief Executive Officer of Element.
  • Bradley Nullmeyer purchased 416,329 shares on June 28 and currently holds 945,604 shares or 0.8% of the company. Bradley Nullmeyer was appointed President of the company, effective September 1, 2012.
  • Steven Small purchased 208,956 shares on June 28 and currently holds 905,765 shares or 0.7% of the company. Steven Small serves as a director of the company.
  • Bruce Smith purchased 208,956 shares on June 28 and currently holds 426,461 shares or 0.3% of the company. Bruce Smith is President, Chief Operating Officer and a director of the company.

Insider buying by calendar month

Here is a table of Element Financial Corporation's insider trading activity by calendar month.

MonthInsider buying / sharesInsider selling / shares
June 20131,583,0000
May 201300
April 201300
March 2013359,0750
February 201300
January 201300

The month of June has seen the most insider buying this year.

Financials

The company reported the first-quarter financial results on May 13 with the following highlights:

Revenue$31.8 million
Net income$4.7 million
Cash$68.4 million
Debt$1.1 billion
Book value$4.75 per share

On June 18, the company closed a $261 million bought deal financing.

News

On June 28, Element Financial and GE Capital closed the previously announced asset purchase transaction through which Element has acquired GE Capital's Canadian fleet portfolio and the two companies have formed a strategic alliance to deliver comprehensive vehicle fleet financing and management services to cross-border customers in Canada and the United States.

Competition

Element Finance's principal competitors in the commercial finance market include, among others, MAXIUM Financial Services Inc., Bodkin Leasing Corporation, Lift Capital Corporation, and subsidiaries of Schedule 1 Canadian banks, such as Roynat Lease Finance and TD Equipment Finance (formerly Capital Underwriters Corporation). As a result of the CoActiv Acquisition and Element's expansion into the U.S. commercial finance market, its competitors now also include, among others, Capital Source Inc., Marlin Business Services Corp. (NASDAQ:MRLN), NewStar Financial Inc. (NASDAQ:NEWS), and other U.S.-based commercial leasing companies and U.S. banks.

Element Capital's primary competitors in the corporate finance market are: GE Capital, CIT, Key Equipment Finance, HSBC, PNC Equipment Finance, Bank of America Equipment Finance, and other Canadian and U.S. banks.

Element Fleet's competitors in the vehicle fleet leasing and fleet management solutions market include Canadian-based fleet management companies, such as Foss National Leasing and Jim Pattison Lease, as well as Canadian subsidiaries of U.S.-based fleet management companies, such as GE Capital Fleet Services and PHH Arval.

My analysis

The stock was trading at $4.20 in December 2011 and the stock is currently trading at $12.29 or 193% above the low made in December 2011. There have been five different insiders buying the shares and there have not been any insiders selling the shares during the past 30 days. The 200-day moving average is currently at $8.13, which could be a good entry point for the stock.

Source: 2 Financial Sector Small Caps With Recent Intensive Insider Buying