Notable buys

Normally market routs like we just experienced are accompanied by a step up in insider buying. That has not happened yet.  Earning season is in full swing now so most insiders are blacked out until after their companies report quarterly numbers. If the market remains lower, we will see what managers, employees, and directors think about the “buying opportunity”?

TCBI Texas Capital Banchares reported 3rd quarter earnings that missed analyst expections, EPS was $1.65 versus consensus $1.70 for the quarter.   Two insiders scooped up This was a big improvement over 2017 3rd quarter yet three analysts lowered their “buy” price targets.  CEO Cargill added two his prior money losing trades this year with 3000 shares at an average price of $67.59.  His previous purchase was 2000 shares last February at $90.60.  Officer Ackerson made his first purchase ever with 2000 shares at $67.

SunTrust analyst Jennifer Demba lowered her price target on Texas Capital to $90 after its Q3 earnings miss but also raised her FY18 EPS view to $6.08 from $5.94. The analyst notes that while the bank posted lower net interest margins, this was offset by lower expenses. Demba also keeps her Buy rating on Texas Capital, adding that the company is being “more prudent with loan growth, launching new deposit gathering verticals and focusing more on efficiency and profitability”. She sees the recent stock price decline as an opportunity for investors to buy shares.

SunTrust analyst Jennifer Demba lowered her price target on Texas Capital to $90 after its Q3 earnings miss but also raised her FY18 EPS view to $6.08 from $5.94. The analyst notes that while the bank posted lower net interest margins, this was offset by lower expenses. Demba also keeps her Buy rating on Texas Capital, adding that the company is being “more prudent with loan growth, launching new deposit gathering verticals and focusing more on efficiency and profitability”. She sees the recent stock price decline as an opportunity for investors to buy shares.

Wedbush analyst Peter Winter lowered his price target for Texas Capital to $94 from $104 after the company reported quarterly results. The analyst notes that Texas Capital maintained its guidance of low to mid-teens for loans held for investment, but growth is expected to moderate in Q4. Winter reiterates an Outperform rating on the shares.

Rising rates are supposed to be good for banks, increasing their margins yet the stock market is reading something else into this, likely marking the peak of the interest rate hikes. No one has told the Fed this, though and the bank stocks perform terribly.

Most of the sales last week were planned sales or secondaries so its not easy to read too much into them. One of them stands out though.

 

In this report, we examined open market purchases from employees  and directors ending the week of October 5 2018. Insiders sell stock for many reasons, but they generally buy for just one – to make money.  As a standard, we only look at material amounts of money, $200 thousand or more, as anything less could just be window dressing.  The bar is different with selling, because the natural state of management is to be sellers. This is because most companies provide significant amounts of management compensation packages as stock. Therefore, with selling, we analyze for unusual patterns, such as insiders selling 25 percent or more of their holdings or multiple insiders selling near 52 week lows.Another red flag are large planned sale programs that start without warning. We generally ignore 10 percent shareholders as they tend to be OPM (other people’s money) and not the SMART money we are trying to go to school on.  Although this info is available for free from the SEC’s Web site , Edgar, we subscribe to the Washington Service as they provide a way to manage and make sense of the vast realms of data.
To learn more about our strategy, visit our website here. We welcome your comments on our analysis. We may own positions, long or short, in any of these names and are under no obligation to disclose that.