Financials: Insiders Buying on Consistent Basis

Wachovia (WB) insiders are buying shares on a consistent basis. When you couple this with recent news, it seems to be a sign of a general trend in financials. Lanty L. Smith, a director of Wachovia Corp. bought 40,000 shares of common stock, according to a Securities and Exchange Commission filing Friday. This follows purchases earlier by other insiders, including smith himself.

In a Form 4 filed with the SEC, reported buying the shares last Thursday for $34.76 a piece for a total purchase of $1.39 million. This follows recent announcements that for the first time in years, net insider purchases of stock outpaced sellers. Usually, due to options received by insiders, net sales are more than purchases.

While it is hard for us looking in to quantify the recent effects of the dramatic rate cuts on financials by the Fed, if we follow the insider buying or interest in financials by "value investors", we get a good picture. Berkshire Hathaway's (BRK.A) Warren Buffett and Wilbur Ross are getting interested, Leucadia (LUK) is buying up shares of AmeriCredit (ACF), Citigroup (C) has seen insider buying and Bank of America (BAC) has got what will be seen as perhaps the bargain of the year in Countrywide (CFC) and Richard Pzena is buying shares of Citi and Freddie Mac (FRE).

Financials (XLF) seemed to have bottomed on Jan. 18th, and it is no coincidence the famed bottom dwellers above are circling.

Disclosure: Long WB, C

Comments

[kowalski:]

Insider buying is not meaningful UNLESS the insider risks a meaningful proportion of their net worth.

For example, if an insider earns a salary of some 3 mio a year every year and has a net worth of, lets say, 25 mio, and he buys stocks for 1.5 mio, what does this really mean to you as an investor-speculator?

2008 Feb 17 09:46 AM

[H2O:]

I Hold A Dream

I hold a dream - that my neighbor down the street
- will look at me with eye's of joy - and get rid
of the eye's of fear - For it is I his neighbor -
that will help - In his hour of need.

I hold a dream - that my neighbor across this city
- will look at me with eye's of joy - and get rid
of the eye's of fear - For it is I - his neighbor -
that will help - In his hour of need.

I hold a dream - that my neighbor across this country
- will look at me with eye's of joy - and get rid
of the eye's of fear - For it is I his neighbor -
that will help - In his hour of need.

I hold a Dream - that my neighbor across this world
- will look at me with eye's of joy - and get rid
of the eye's of fear - For it is I his neighbor -
that will help - In his hour of need.

I hold a dream - That my neighbor - no matter what color
or greed - man or woman - who they say is there god - will
look at me with eye's of joy - and get rid of the eye's
of fear - For it is I his neighbor - that will help - In
his hour of need.

I hold a dream all men and women - are all Created equal
- neighbors we are - neighbors - we shall always be.

I hold a dream - In my hour of need - My neighbor Shall
always be there.

~WARRIOR~

2008 Feb 17 05:00 PM

[Jake2:]

Re: Warrior. Poem didn't quite work. Dactyl ducks not in a row, too many iambic foots in the mouth. Try straight prose.

2008 Feb 18 01:09 PM

[Arohan:]

Thanks Todd for a good summary of how many value/vulture investors think that the financials are very good buys right now. I have been advocating my readers to start buying financials for some time on my site (www.arohanvalue.com) as this may be an opportunity that one finds very rarely for some outsized gains

2008 Feb 18 01:38 PM

[Chris Ng:]

While I agree that large insider purchases relative to their net worth is better, WB insiders have been purchasing millions. The biggest purchase I saw was 20 million. To me, these look like significant purchases.

To Arohan -- it has to be on a case by case basis, I don't think you can say all financial stocks are good buys at moment. But personally, I feel that insider actions weigh heavily. Outsiders can never know the quality of the balance sheet as well as inside mgnt. I am bullish on WB for that very reason.

Chris

2008 Feb 18 01:49 PM

[H2O:]

Wasn't for a poem dukie boy - an example of words

Clinton spokesman Howard Wolfson accused Obama of plagiarizing:

HOW CLINTON HAS PLAGIARIZED THE WORD OF GOD FOR EVIL !!!!

THE ILLEGAL SLAVE MASTER'S - USING AND LEAVING FOR DEAD - THERE
CHEAP SLAVE LABOR - THEN PROTRAY THEM-SELF'S - AS BEING GOOD !!!!

LOOK-LOOK - I FOUND ME A CHEAP SLAVE-LABOR BY THE ROAD-SIDE -
DON'T THINK SO .......

25. And behold, a certain lawyer stood up and put Him to the test,
saying, "Teacher, what shall I do to inherit eternal life?"

26. And He said to him, "What is written in the Law? How does it
read to you?"

27. And he answered and said, "You shall love the LORD your God with
all your heart, and with all your soul, and with all your strength,
and with all your mind; and your neighbor as yourself."

28. And He said to him, "You have answered correctly; Do this and
you will live."

30. Jesus replied and said, "A certain man was going down from
Jerusalem to Jericho; and he fell among robbers, and they stripped
him and beat him, and went off leaving him half dead.

31. "And by chance a certain priest was going down on that road, and
when he saw him, he passed by on the other side.

32. "And likewise a Levite also, when he came to the place and saw
him, passed by on the other side.

33. "But a certain Samaritan, who was on a journey, came upon him;
and when he saw him, he felt compassion,

34. "and came to him, and bandaged up his wounds, pouring oil and wine
on them; and he put him on his own beast, and brought him to an inn,
and took care of him.

35. "And on the next day he took out two denarii and gave them to the
innkeeper and said, 'Take care of him; and whatever more you spend, when
I return, I will repay you.'

2008 Feb 18 03:57 PM

[H2O:]

Here's your poem

I Hold A Dream

I hold a dream - that my neighbor all across this world
- will look at me with eye's of joy - and get rid
of the eye's of fear - For it is I his neighbor -
that will help - In his hour of need.

I hold a dream - That my neighbor - no matter what color
or greed - man or woman - who they say is there god - will
look at me with eye's of joy - and get rid of the eye's
of fear - For it is I his neighbor - that will help - In
his hour of need.

I hold a dream all men and women - are all Created equal
- neighbors we are - neighbors - we shall always be.

I hold a dream - In my hour of need - My neighbor Shall
always be there.

~WARRIOR~

2008 Feb 18 03:59 PM

[H2O:]

Now here is the words .....

I Hold A Dream

I hold a dream - that my neighbors, From across the
world, will look at me with eye's of joy, and get
rid of the eye's of fear, For it is I, your neighbor,
that will always be there, In your hour of need.

I hold a dream - That my neighbors - no matter what color
or greed - man or woman - who are all Created equal, will
look at me with eye's of joy, and get rid of the eye's
of fear, For it is I your neighbor, that will always there,
In your hour of need.

I hold a dream - That all my neighbors, From all across
this world, Will always be there for me.

For neighbors we are, and neighbors we shall always be.


~WARRIOR~

2008 Feb 18 04:54 PM

[Norman Lepo...:]

Good article.

2008 Feb 21 02:23 PM