×

Subscribe Today

Get our free articles delivered directly to your email!

Continue reading

Recent Insider Buying in Thrift Conversion NB Bancorp – Insider Weekends

  • January 14, 2024

NB Bancorp Inc. (NBBK): $13.97

Market Cap: $368.11M

While we’ve analyzed banks as part of Insider Weekends numerous times in the past, this week’s addition to the list stood out especially due to its unconventional trading debut. NB Bancorp (NBBK), the holding company for the Massachusetts-based Needham Bank, went public just over two weeks ago through what is known as a demutualization or thrift conversion.

Thrifts, or mutually owned banks, are banks where depositors own the bank’s capital. Unlike a typical bank, where the institution is owned by and responsible to shareholders, a mutual bank (like Needham Bank) is owned by the depositors who don’t have voting rights in operations. When one of these banks chooses to go public, it is considered to be a mutual-to-stock conversion, otherwise known as a demutualization or thrift conversion. In the IPO, depositors (and insiders of the bank) are the first ones to subscribe to the offering and finally own the capital in the bank.

Unlike other IPOs where insiders often sell when the company goes public and not all IPO proceeds go to the company, the capital in a thrift conversion goes directly to the bank. Due to the nature of the transaction, you’re essentially buying into the thrifts at a discount when they go public, which is why Peter Lynch and other investors like Ed Thorp were/are fond of the thrift conversion space – often depositing money at small banks across America with the hope that a thrift conversion would happen eventually. Ed Thorp discusses going around the country and opening accounts at thrifts in his excellent book A Man For All Markets: From Las Vegas to Wall Street, How I Beat the Dealer and the Market.

Only plus or premium subscribers can access this post. Subscribe today.