In the midst of the Silicon Valley Bank collapse, bank executives at other establishments were buying up their own stock in droves, reports an article in Forbes. 43 insiders at other banks purchased their own shares on the day of the collapse, the largest number of insider buying in the banking industry since the early days of the pandemic in May 2020, and 35 insiders executed buybacks the Monday following SVB’s closure.
Validea Exclusive Discount Offer
Join Thousands of Investors Who Benefit From Validea’s Proven Systematic Strategies. 25% Off Annual Standard and Professional Subscription During Month of March.
The buybacks could be an effort to instill confidence in the banks’ investors during the crisis, but it could also indicate that bank insiders believe their stocks are oversold and are seizing the opportunity to buy while bank stocks are down. Whatever the reason, it does seem that bank insiders had an inkling of what was going to happen before everyone else. At PacWest, there were 13 separate insider purchases since the day before the collapse, compared to a total of 7 buybacks for all of 2022. Following the purchases, Insider Insights, which tracks insider data, bestowed PacWest, along with Metropolitan Bank, Glacier Bank, and Farmers National Bank, its highest rating, indicating which executives it believes are giving the clearest signals about their stocks. Metropolitan’s stock soared about 40%, and though Glacier and Farmers National had gains of only 8% each, both banks are outperforming the KBW Bank Index, according to Forbes.
Whether insiders believe that their banks are immune from the same kind of collapse that took SVB down, or that they’re trying to show strength in the face of adversity to their investors, or simply taking advantage of the situation to make money, it would be foolish to ignore their insight that the banking sector may have been oversold, the article concludes.