Banking Chiefs Are Aggressively Buying Their Own Stocks In The Wake Of Silicon Valley Bank’s Collapse

As Silicon Valley Bank was taking a beating and on the verge of being shut down, everyone was starting to get a little nervous — everyone except the top executives at other banks. In the middle of the chaos, bank insiders have been buying their own stocks at a breakneck pace.

On Friday, 43 insiders at depository institutions bought their banks’ shares, making it the biggest cluster of insider buying in the industry since May 2020, according to Insider Insights, which tracks such data. Because of the lag in reporting insider transactions to the Securities and Exchange Commission, that number could continue to rise over the next few days as more filings come in.

Why? Experts said that it could be a signal to the market of their institutions’ strength, a sort of “don’t worry, we’ve got this” message to investors. Or, with most bank stocks down, it could be a case of bargain hunters looking to turn a buck. Jonathan Moreland, the director of research at Insider Insights, is convinced that the buying frenzy means “there’s an awful lot of bankers who think their stocks are oversold,” he told Forbes.

Bankers didn’t take a breather on Monday. With 35 transactions registered so far, it was the second-heaviest buying day since May.

It seems the insiders knew something that the rest of the world didn’t. Take PacWest, for example. Since last Thursday, there have been 13 different insider buys. For context, PacWest insiders only bought their own stock seven times all of last year. On Tuesday, the stock was halted, limit up, after rising a record 64% in early trading.

Insider Insights gave PacWest stock its highest rating in its Monday report, a designation based not only on the number of insiders buying or selling shares, but also on percentage change and other metrics — it’s a measurement of which executives are sending the strongest signals about their stocks. On Monday, five of the top six spots on its daily report were occupied by regional banks.

Other banks rated highly by Insider Insights on Monday included Metropolitan Bank, Glacier Bank and Farmers National Bank. Metropolitan’s stock has surged more than 40% on Tuesday while Glacier and Farmers National have seen more modest gains of about 8% each. However, both are outperforming the KBW Bank Index’s 6% rise on the day.

Maybe the insiders are right, that their banks are immune to contagion. Or maybe they’re just trying to put on a brave face for the market. Or perhaps they’re simply trying to make some money. One thing’s for sure, though. Folks like Moreland are putting their faith in what the insiders are telling them.

“Over the last year, insiders correctly told us to buy energy and stuff stocks,” he told Forbes. “This doesn’t mean the pull back is over, but it’s a clue that the banking sector got oversold.”