With earnings season upon us and insiders coming out of quite periods that limited their ability to purchase stock, it has been absolutely fascinating to watch the insiders of regional and smaller community banks buy stock in their companies hand over fist. On some days last week, the only insider transactions that met our criteria for inclusion in our daily Event Driven Monitor posts were by insiders of regional banks.
I wanted to focus on a regional bank as a spotlight idea for our May Special Situations Newsletter, which should be out tomorrow, but it was difficult to find a regional bank where both the insiders were buying stock and the company was buying back its own stock. The reluctance of banks to buyback their stock despite the big drop in regional bank stocks can be attributed to banks wanting to preserve precious capital in an environment where depositors are gravitating towards larger “too big to fail” banks. This mini-panic will eventually subside but I don’t think we have seen the bottom yet.
I was able to find an exciting opportunity created as a result of a forced acquisition where the insiders of the regional bank that made the acquisition were buying stock in March. The company is now trading at a discount to its tangible book value and I have discussed the opportunity in more detail in our May Special Situations newsletter.
Beyond regional banks, the other insider purchase that stood out last week was the $10 million purchase of Enphase Energy (ENPH) by its Director Thurman J. Rodgers. This purchase was reminiscent of the purchase of the microcap company FTC Solar (FTCI) by its independent Director T. J. Rodgers we discussed in an Insider Weekends article three weeks ago. In that article we highlighted some of the tailwinds benefiting solar energy companies and wrote the following:
Demand for residential solar installation is up significantly in recent years due to federal incentives as well as state mandated standards such as California’s requirement that every new single family home and certain multifamily properties have to install a solar electric system starting in January 2020. However the biggest gains both in terms of efficiency and costs have been on the utility scale solar projects. Thin-film solar cells have seen their efficiency increase from just 8% in 1980 to over 23% this year.